Exercise:
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, perform all the computations necessary to set a fee. What will your fee be?
FIGURE: Major Fee-Setting Issues (CHECK LIST)
1. Direct and indirect costs
2. Depreciation and use allowance
3. Unallowable costs
4. Profit margins
5. Fixed and variable costs
6. Break-even points
7. Market prices
8. Variable fee and sliding fee schedules