dolution

Two former secretaries have set up a secretarial and book-keeping service on a local trading estate. It offers basic services to the small companies on the estate. The major expense is the salaries of the two partners, and one employee, a word processing operator. Overheads include office rent and rates, and the maintenance of office equipment such as computers, fax machine, answerphone, etc. There is also the interest on the bank loan used to buy equipment. The organisation is really offering ‘time’, carrying out routine tasks. They calculate the overheads are £15 200 per annum, the employee is paid £6000 (including employee related costs) and the two partners draw £1000 per month each. Total running costs for stationery, telephone bills, postage are a further £10 000, giving a total £55 200 per annum.

There are 230 working days per year if we eliminate weekends and holidays. But no one works at 100 per cent; 80 per cent is still good, so if we assume days each (80%  230) for the three productive workers there are 552 working days each year. To just break even they