E X E R C I S E S Exercise 11.1
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 than the 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?
You are the executive director 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?
please helpppppppppp!!!i did it already but i need to make sure it is correct!!
To set a fee for the seminar, we will need to calculate the total costs and then determine the number of participants needed to cover those costs.
For Exercise 11.1:
1. Conference room rental: $175.00
2. Audiovisual equipment rental: $75.00
3. Presenters (4 x $500): $2,000.00
4. Workbooks (45 x $15): $675.00
5. Lunches (45 x $12): $540.00
6. Coffees (45 x $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 (this is the total cost)
To determine the fee, you have two options. You can either divide the total cost by the number of participants or add a fixed fee to the total cost.
Option 1: Divide the total cost by the number of participants (45):
Fee = $4,756.00 / 45
Fee ≈ $105.69 (rounded up to the nearest cent)
In this case, each participant would need to pay approximately $105.69.
Option 2: Add a fixed fee to the total cost:
Fee = $4,756.00 + Fixed fee
You can choose any amount for the fixed fee, depending on your strategy and goals.
The break-even point is the number of participants needed to cover the total costs. In this case, the break-even point is reached when the total revenue (number of participants x fee) equals the total cost ($4,756.00).
Go/No-Go decision point is based on the desired attendance. If you want to proceed with the seminar, you need to achieve at least the break-even point. If the expected attendance is lower than the break-even point, it may not be financially viable to proceed with the seminar.
For Exercise 11.2:
Follow the same steps as in Exercise 11.1 to calculate the total cost, but exclude the profit margin in the fee computation.
Once you have the total cost, you need to set the fee as low as possible. This means you should aim to cover only the direct costs and indirect costs (without including any profit margin). The fee should be affordable for participants while still covering your expenses.
To compute the fee, you can divide the total direct and indirect costs by the expected number of participants (45). This will give you the lowest possible fee required to cover costs.