Question

Given you are constrained to your house due to Covid-19 you have decided to try and launch your own small business.

Required (200 words):

a. Design a small business and document 1 key product. Name your business and product. List a maximum of 10 costs that will be involved in selling your product and explain why they are either a variable or fixed cost.

b. Estimate a reasonable selling price per unit for your product and estimate a value for each of the costs you listed in part a.

Answer 1

a.

Currently due to Covid-19, the main issue is associated with the education of the students, which hampers their knowledge and their development process. So, one could start an online coaching center to provide education to the students so that they can learn from their home.

So my small business is online coaching center and the key product is academics studies.

Here are some costs associated with this business:

1) Fixed cost:

a) cost of technology (computer with web camera)

b) cost of attracting students (advertisement)

c) cost of raw material (books, magazines, pen, and so on)

2) Variable cost:

a) Cost of electricity

b) Cost of labor (teachers)

b. To estimate the selling price, first, we need to estimate the value of each of the costs.

So,

• Expected cost of technology would be $30,000.
• Expected cost of advertisements would be $4,000.
• Expected cost of raw material would be $6,000
• Expected cost of electricity would be $4,000 per month.
• Expected cost of hiring teachers (labor) would be $7,000.

Therefore, the total expected cost would be $51,000 per month.

We are estimated the average number of students would be 20.

So the reasonable selling price for each student would be $3000 as the cost per student is estimated as $2,550.