Question

Assume that Damon decides to start a party-planning business:

A. Identify two ways he could assess the cost of goods or services sold for this business.

B. Which costs, described in the case, will become part of Damon’s operating cost structure?

C. Make a list of additional items Damon will need to purchase to get his business off the ground. Research the cost of these items.

Answer 1

1. Since the whole process is based on the assumption we will assume that Damon has earned a total amount of $5400 as the result of the event and his entire expenditure was of $1400. This includes the cost of the venue, the decoration, the furniture, music and food and beverage. Damon realizes that he had an effective profit of $4000 dollars which he needs to not down in a ledger of some kind or an accounting software and needs to maintain the same throughout. since the entire expenditure is $1400, it would include the cost of all the necessary items that he had to arrange and therefore, using an inventory system or even by creating a non-technological catalogue system he can identify the effective cost of every product and utilize the prices that are provided to him in the market. This will allow Damon to both keep a track of his expenditure and also provide him with the option of maintaining an inventory system for future references.

2. The cost of $1400 will become part of Damon's operating cost. This will include the venue, which can include the changes in price depending on the location of the venue. but, most other costs can be considered to deviate just a little form their mean values that are presented.

3. Additional items that Damon needs to purchase to get his business off the ground include investing in management software which is very necessary for him since he is just starting out and does not have a separate procedure for accounting and inventory management. The cost of implementing this system can vary depending on his needs and the size of the organization that he is trying to set up. Since it will be a small business, any software with basic inventory management and accounting can be utilized. Even cloud systems can be utilized and would provide a cheaper option in terms of both utilization and cost. He needs to be able to procure deals for a longer time, with the different dealers he deals with to provide him with a consistent price for goods, location and services retained.