11.

1 Identification of Fixed and Variable Costs Fixed Costs Conference room rental Audiovisual rental Presenters Indirect (overhead) costs Profit margin @ 5% of total costs Total fixed costs Variable Costs Workbook Lunches Coffee Total variable costs 675.00 540.00 158.00 1,373.00

175.00 75.00 2,000.00 906.00 227.00 3,383.00

15.00 12.00 3.50 30.50 TOTAL 4,756.00 First thing to do is determine the break-even point for the maximum number of trainees that the room will hold. According to Chapter 11 of the Financial Management for Human Service Administrators this would be 45 people. This would be broken down as follows: 45 trainees XP = A + BX X = number of trainees =

A is the total fixed costs 45P = $3,383.00 + 45P = $3,383.00 + 45P = 45P = $3,383.00 + 4756 4756 / 45 = 105.69

B is the total variable costs $30.50X $30.50 times 45 I t is 45 because x equals the number of trainees to attend 1,373 Here 3383 was added from the previous lines above

Here we divide the trainees out of the equation 45 divided by 45P = 1P P= BREAKEVEN POINT (BEP) is

105.69 $106. Per person

In this equation $106 is the highest we could go in our decision to do the training or not. I will further break this down by finding out the minimum number of attendees. I will calculate this by using 40, 35, and 25.

For 40 trainees:
40 trainees XP = A + BX X = number of trainees = 40P = 40P = 40P = 40P = Here we divide the trainees out of the equation 40 divided by 40P = 1P P= BREAKEVEN POINT (BEP) is

A is the total fixed costs + $3,383.00 + $3,383.00 + $3,383.00 + 4755.5 _4755.5 / 40 = __118.89___

B is the total variable costs $30.50X $30.50 times 40 1372.5

$ 118.89 $119

For 35 trainees:
35 trainees XP = A + BX X = number of trainees =

A is the total fixed costs + 35P = $3,383.00 + 35P = $3,383.00 + 35P = $3,383.00 + 35P = 4450.5 _4450.5 / 35 = __127.16___

B is the total variable costs $30.50X $30.50 times 35 1067.5

Here we divide the trainees out of the equation 35 divided by 35P = 1P P= BREAKEVEN POINT (BEP) is

$ 127.16 $128

For 25 trainees:
25 trainees XP = A + BX X = number of trainees = 25P = 25P = 25P = 25P = Here we divide the trainees out of the equation 25 divided by 25P = 1P P= BREAKEVEN POINT (BEP) is

A is the total fixed costs + $3,383.00 + $3,383.00 + $3,383.00 + 4145 _4145 / 25 = __165.82___

B is the total variable costs $30.50X $30.50 times 25 762.5

$ 165.82 $166

After everything is broken down It would be more beneficial for 35 participants because 25 is too expensive taking it out of market range while 40 still pushes it too far. The fee is then rounded up so that there is not a concern for falling short because of change. This would put my fee at 128 because my BEP is 127. At this rate I will have a $30 profit. With only .16 the first glance makes it seem that there is not a big difference but this quickly adds up to being $5 short of the breakeven point. This is why it is more efficient to round up to the nearest dollar. The major fee-setting issues as highlighted in the text are,
FIGURE 11.1 Major Fee-Setting Issues

1. 2. 3. 4. 5. 6. 7. 8.

Direct and indirect costs Depreciation and use allowance Unallowable costs Profit margins Fixed and variable costs Break-even points Market prices Variable fee and sliding fee schedules (Martin, 2001)

Personally I see the importance in all of these but I think that knowing your breakeven point and direct and indirect costs are most important. If you go over your budget because on lack of knowledge in these areas the programs will not work. Organizations need money to function and depletion of these resources will make a company fail. Knowledge of costs and limits will help to keep the agency running at the bare minimum.

11.2 Identification of Fixed and Variable Costs Fixed Costs All Data was taken from 11.1 Conference room rental Audiovisual rental Presenters Indirect (overhead) costs Total fixed costs Variable Costs Workbook Lunches Coffee Total variable costs TOTAL Just as before we must determine the breakeven point. 45 trainees XP = A + BX X = number of trainees = 45P = 45P = 45P = 45P = Here we divide the trainees out of the equation 45 divided by 45P = 1P P= BREAKEVEN POINT (BEP) is 675.00 540.00 158.00 1,373.00 15.00 12.00 3.50 30.50 4,529 175.00 75.00 2,000.00 906.00 3,156.00

A is the total fixed costs $3,383.00 + $3,383.00 + $3,383.00 + 4529 4529 / 45 = 100.64

B is the total variable costs $30.50X $30.50 times 45 1,373

100.64 $101. Per person

Using the chart from 11.1 I changed the numbers bringing me to my total of $101. This is the cheapest I can go with the knowledge that 45 people would be undoubtedly covered.