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HSM260 Fee Setting

# HSM260 Fee Setting - Running head FEE SETTING 1 Fee Setting...

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Running head: FEE SETTING 1 Fee Setting Kristina M Spencer HSM260 May 8, 2011 Erin Akins

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FEE SETTING 2 Fee Setting 11.1 Proposed Seminar Budget 1. Conference room rental \$175.00 \$ 175.00 2. Audiovisual equipment Rental 75.00 3. 4 presenters @ \$500 2,000.00 4. 45 workbooks @ \$15 675.00 5. 45 lunches @ \$12 540.00 6. 45 coffees @ \$3.50 158.00 Subtotal \$3,623.00 7. Indirect costs @ 25% of \$3,675.00 \$ 906.00 Subtotal \$4,529.00 8. Profit margin @ 5% of \$4,594.00 \$ 227.00 Total \$4,756.00 Total = Conference room Rental + Audiovisual Equipment Rental + Presenter \$175 + \$75 + \$2,000=\$2250 Total = Cost of workbooks + Cost of Lunches + Cost of Coffees \$675 + \$540 + \$157.5=\$1372.5 or Overhead cost 3622.5/100x25=905.63 = Total Fixed Cost + Total Variable Cost + Overhead cost \$1,375.5 + \$3,622.5 + \$905.63=5903.63 Profit margin = 5% of total cost 4528.13/100x5= \$226.41 Total Minimum revenue to be generated = Total Cost + Profit Margin \$4,528.13 + \$226.41=4754.54 Suggested Fee = Total Minimum revenue to be generated /45 \$4,754.54/45 = \$105.66 Per unit Variable cost Workbooks = \$15 Lunches = \$12 Coffee = \$3.5 Total per unit Variable cost = \$30.5 Break Even Point At suggested fees = Total Fixed cost + Total Over Head Cost / Suggested fees – Variable Cost per Unit 2250+905.63/105.66-30.5 3155.63/75.16 = \$42 Go/ No Go decision: Classes should be cancelled if at least 42 students do not enroll. The organization will lose money.
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