Rob Keeble
Member
- Messages
- 12,633
- Location
- GTA Ontario Canada
For those in business here is a question how would you deal with it.
Facts
What would your answer to Mr out of the blue be and why? Do you take the order? and if so why?
What factors/issues would you take into account to justify your action either way?
Now change the "widget" from an item to a project such as a "full kitchen cabinet and install" what would you consider to have changed.
For those that are accountants i would ask you refrain from answering, my intention here is to get some debate going amongst the non accounting business pros out there. There are other aspects left out to make this simplified.
This is a point i come across all too often and thought i would share it and see the different views.
Have fun
Oh for the lumber jacks this could also be wood as opposed to a widget.
Facts
- Your business produces an item say "widget".
- The widget direct cost of material, direct labor, packaging and shipping is say $50 total.
- You consistently seel just on around 100 "widgets" per month to your current customer base.
- You sell your widgets for $100 per unit.
- Your overhead costs or burden is $4000 per month. ( rent,electricity, insurance, telephones, advertising etc).
- There are no customer discounts, rebates etc just to take it out of the equation.
- Your profit before tax is therefore $1000.
What would your answer to Mr out of the blue be and why? Do you take the order? and if so why?
What factors/issues would you take into account to justify your action either way?
Now change the "widget" from an item to a project such as a "full kitchen cabinet and install" what would you consider to have changed.
For those that are accountants i would ask you refrain from answering, my intention here is to get some debate going amongst the non accounting business pros out there. There are other aspects left out to make this simplified.
This is a point i come across all too often and thought i would share it and see the different views.
Have fun
Oh for the lumber jacks this could also be wood as opposed to a widget.
Last edited: