Worksheet+6A

[|[i]] WORKSHEET 6A Budget

Instructions
q Based on your research and the requirements worksheets in Step 5, create a one-year budget to start up and operate this venture. q Next, separate out variable costs from fixed costs. For fixed costs, identify how long it will be before the cost will be incurred again. _ 1. What are the annual fixed costs to start up and operate this venture for one year? To make this calculation, first list each fixed cost along with its “useful life.” For those costs that cover more than one year, enter only the first year’s costs. To compute the first year’s costs, divide the total cost by the number of years (its useful life). For example, if you pay $1,500 for a copy machine with a three-year life, you would assign $500 as a first-year fixed cost. Expenses of this sort are often referred to as capital expenses.

Administrator and Operations Coordinator || $69,120 ($18 d/hour) || Annual || Nutritionist and Cheff advisors, Cheff trainer || $8,640 ($15 d/h, 4 hours/week) || Annual || (2 tables, 6 chairs, 1 whiteboard, 1 bookshelf) || $1,000 || 5 years ||
 * **Fixed costs** || **Annual amount** || **Useful life in years** ||
 * Salary Full-time staff (2)
 * Salary part-time staff (3)
 * Rent of a small office || $8,400 ($700/month) || Annual ||
 * 1 computer & printer || $2,000 || 3 years ||
 * 1 telephone line || $720 ($60/month) || Annual ||
 * Funiture
 * Marketing tools (posters, brochures, etc.) || $3,000 || Annual ||

2. What will the variable costs be for the products this venture will sell? You may need to make an assumption about average price per unit. 

Average price per unit = $10 Monthly cost = $30,000 || Average price per unit = $5 Cost = $2500 (if distribute 500 samples) || One time payment for consultation Cost = $1500 || Average price per person per day = $40 Monthly cost = $1600 || 3. Optional: Summarize fixed and variable costs graphically. Dollars form the vertical axis and sales units form the horizontal axis. Graph the fixed costs first; they will form a horizontal line. Graph the total costs next; they will form an ascending line rising above the fixed costs. The space between the fixed costs and the total costs is a graphic representation of variable costs.
 * **Estimated variable cost** ||
 * **Cost** ||
 * Raw materials (vegetables, meat etc.)
 * Raw materials (vegetables, meat etc.)
 * Samples cost
 * Commission for outside dieticial
 * Commission for outside dieticial
 * Parking, food etc for venture promoters
 * **Total variable costs per unit = $70** ||
 * Variable cost varies depending on the expenses that comes up each month. ||
 * **Total variable costs per unit = $70** ||
 * Variable cost varies depending on the expenses that comes up each month. ||
 * **Total variable costs per unit = $70** ||
 * Variable cost varies depending on the expenses that comes up each month. ||
 * **Total variable costs per unit = $70** ||
 * Variable cost varies depending on the expenses that comes up each month. ||
 * Variable cost varies depending on the expenses that comes up each month. ||



[|[i]] //Copyright 2002 Amherst H. Wilder Foundation Published by the Amherst H. Wilder Foundation, 919 Lafond Ave., St. Paul, MN 55104// May not be copied or altered except for use by organization or individual who purchased this book. May not be resold.