1 Explanation of Fixed Cost Estimates An NDC Inc. Resource by guym13

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									                           Explanation of Fixed Cost Estimates
                             An NDC, Inc. Resource Document

Instructions: Explain where you got the amounts for the fixed costs in the worksheet.

    Accounting and
     Bookkeeping


     Bank charges


       Dues and
     subscriptions

   Equipment Lease

       Insurance

 Licenses and permits

     Loan payment


    Office supplies


     Owner’s draws

     Payroll service

 Phone / fax / internet


  Postage and courier


   Professional fees


       Promotion


          Rent

     Repairs and
     maintenance
        Security


                                                                                        1
 Staff wages & payroll
         taxes


    Transportation


       Utilities

    Miscellaneous




                           Explanation of Fixed Cost Estimates

Here’s an example:

                         I talked to two bookkeepers and learned that it will cost me about $100 per
    Accounting and       month for bookkeeping services. I need an accountant for year end taxes
     Bookkeeping         which will cost me $500 in March.

                         I called my bank and found out that the average charge is about $25 per
     Bank charges        month.

                         Not applicable.
       Dues and
     subscriptions

   Equipment Lease       Not applicable.
                         I talked to two agents and learned that my annual insurance bill would be about
      Insurance          $2,400. I have to pay the first quarter up front and then pay monthly after that.

Licenses and permits     The city license I need costs $1,500.
                         I need a $10,000 loan to start the business. I estimate that my monthly
    Loan payment         payment will be $280.

                         I will need to order paper every other month plus other supplies monthly. My
    Office supplies      monthly order will average about $75.

                         I have to take $500 per month from the business.
    Owner’s draws

                         I will be using Paychex. They will charge be $55 per pay period. I will pay
    Payroll service
                         my staff twice a month.
                         I have a quote from Qwest that my landline, fax and internet line will cost
Phone / fax / internet   $155 per month. My cell phone will cost another $90 per month.

                         I estimate that I will send out 80 invoices per month, 100 sales letters, 25

                                                                                             2
Postage and courier     bills, plus another 50 miscellaneous items per month. This totals about
                        $99.45 per month – say $100
                        I need a lawyer to review contracts. I will use the lawyer about twice a year
  Professional fees     for two hours each. She charges $175 per hour.

                        I have budgeted $250 per month for an ad in the neighbourhood newspaper.
     Promotion

                        Landlords charge an average of $15 per square foot for space in the area I
        Rent            want to locate. I need 1,500 square feet. My monthly rent will be $1,875.
                        ($15 * 1,500 SF ÷ 12 months)
                        I have talked to a cleaning company and it will charge me $150 per month to
    Repairs and
                        clean my space. My equipment is new so I don’t need to budget for repairs
    maintenance
                        until the last 6 months when I budget $50 per month.
      Security          The security company tells me it will cost $30 a month for my burglar alarm.

                        I will be open 80 hours per week. I need two staff for 50 of the busiest hours
                        and 1 staff on duty the remaining 30 hours. I will start everyone at $10 per
Staff wages & payroll
                        hour. I estimate that payroll taxes add another $1 to the wages. My weekly
        taxes
                        payroll cost is $1,430 ((50 hours * 2 staff * $11/hour) + (30 hours * 1 staff *
                        $11/hour)). My monthly payroll costs is $6,149 ($1,430/week * 4.3 weeks
                        per month)– say $6,150.
                        I estimate that I need to drive my car for the business about 500 miles per
   Transportation       month at a cost of $0.445 per mile or $222.50 per month.

                        I spoke with several other businesses in my sized space and learned that they
      Utilities         pay about $400 per month for utilities.

   Miscellaneous        I estimated about $100 per month for miscellaneous items that might come
                        up.




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