Schell and Larsen is a law firm based in Dubai . The firm is considering expandi
ID: 2424050 • Letter: S
Question
Schell and Larsen is a law firm based in Dubai . The firm is considering expanding current operations into Sedalia because the higher crime rate would likely generate more business. They do not simply want to move, though, as their office in Dubai is doing quite well. Thus, Schell and Larsen must incur additional expenses in order to open a another branch. In particular, they would need to hire a lawyer and a secretary, rent a building, and implement an aggressive advertising campaign. The lawyer’s salary is anticipated to be $80,000 per year. The building’s rent will be $4,000 per month. The secretary will be paid $12 per hour and will work 40 hours per week. Benefits for the lawyer and secretary amount to 10% of what they are paid. The advertising campaign will cost $6,000 per month for the first six months, and $3,000 for each of the remaining six months of the first year. The revenues generated are a little complicated, but Schell and Larsen plan on charging $50 per initial consultation, and $500 per case thereafter. Assuming 10% of initial consultations result in an actual case being generated, how many initial consultations will the other branch have to generate during the first year in order to break even?
Explanation / Answer
Schell & Larsen Fixed Cost Details for Sedalia Branch Details Cost per month $ Yearly Cost $ Lawyer's salary 80,000.00 Secetary's salary 1,920.00 23,040.00 Total Salary cost 103,040.00 Benfits @10% of salary 10,304.00 Office Rent 4,000.00 48,000.00 Advertising expense 54,000.00 Total fixed cost in first year 215,344.00 Assume the Break even no of initial consultations =k So k*50+ k/10*500=215344 k=2153.44 So to break even approx 2154 initial consultations required.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.