The child and family government benefits seminar was such a success that Advocates
for Children will conduct a second seminar in an adjoining community. The
executive director decides that this second seminar will attempt to maximize revenues.
Consequently, no reduced fee schedule will be offered. All trainees will pay
the full seminar fee. The seminar will take place in a smaller conference room thanthe earlier one. The room can only accommodate a maximum of 45 trainees. Here
is the proposed budget for the seminar:
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
You are the executive director. Following the checklist in Figure 11.1, perform
all the computations necessary to set a fee. What will your fee be? What is your
break-even point? What is your go/no-go decision point?
Exercise 11.2
As the executive director of Advocates for Children, you have had a change of
heart. You decide not to attempt to maximize revenues in this second seminar. You
decide to exclude a profit margin in the fee computation, but you will include indirect
costs. Additionally, the local United Way in the community hosting the seminar
has guaranteed 45 participants. If fewer than 45 participants register for the
seminar, the United Way will make up the difference. In exchange for this guarantee,
the United Way has asked you to set the seminar fee as low as possible. Following
the checklist in Figure 11.1, perform all the computations necessary to set a
fee. What will your fee be?
What the dickens is Figure 11.1??
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To set the fee for the seminar and determine the break-even point, we need to perform a series of computations as outlined in the checklist provided in the question.
First, let's calculate the total direct costs of the seminar:
1. Conference room rental: $175.00
2. Audiovisual equipment rental: $75.00
3. 4 presenters at $500 each: 4 * $500 = $2,000.00
4. 45 workbooks at $15 each: 45 * $15 = $675.00
5. 45 lunches at $12 each: 45 * $12 = $540.00
6. 45 coffees at $3.50 each: 45 * $3.50 = $158.00
Total direct costs = $175.00 + $75.00 + $2,000.00 + $675.00 + $540.00 + $158.00 = $3,623.00
Next, let's calculate the indirect costs:
Indirect costs = 25% of total direct costs = 25% * $3,675.00 = $906.00
Now, let's calculate the total costs:
Total costs = Total direct costs + Indirect costs = $3,623.00 + $906.00 = $4,529.00
Since we are not including a profit margin, the fee will be equal to the total costs:
Fee = Total costs = $4,529.00
The break-even point is the number of participants needed to cover the total costs. In this case, the United Way has guaranteed 45 participants, so the break-even point is 45.
Therefore, the fee for the seminar, when not maximizing revenue and excluding profit margin, will be $4,529.00 and the break-even point is 45 participants.