Li Nguyen wants to start a bookkeeping business in 2023. Li expects that each hour of bookkeeping
Li Nguyen wants to start a bookkeeping business in 2023. Li expects that each hour of bookkeeping will earn $60 in revenue. Li estimates that office supplies are likely to be $7.50 per bookkeeping hour and rental of an office space will be $900 per month based on her research. Additionally, utilities such as electricity, water are estimated to cost $300 per quarter. She will also need an employee at the front reception desk to receive calls, make appointments, etcetera which will result in a wage cost of $1,400 per month. Some of Li’s clients will come into her office while others will need Li to visit them at their premises. Hence, Li will rent a car at $600 per fortnight and she envisages that petrol costs will be $14 per bookkeeping hour on average. Internet and phone costs are estimated to be $6 per bookkeeping hour
A. Calculate how many bookkeeping hours need to be provided to break-even. Round to the nearest whole hour. Show your calculations.
B. If Li wants to earn a before-tax profit of $40,000, calculate the number of bookkeeping hours that would need to be provided to earn this amount of profit. Show your calculations and round to the nearest whole hour.
C. If the business provides 1,900 bookkeeping hours, calculate the amount of net profit (before tax) this would generate. Show your calculations.