Question
Personal Planners provides financial advice to their clients on investment, retirement planning, and tax management. Based on last year's client list of 100 clients, the
Personal Planners provides financial advice to their clients on investment, retirement planning, and tax management. Based on last year's client list of 100 clients, the cost of providing retirement planning is $594 per client, itemized as follows:
Textbook: Personal Financial Planning (Ho & Robinson) $57 Photocopying 10 Advisor's time (2 hours @ $90) 180 Computer simulation fee 50 Direct costs $297 Overhead (100% of direct costs) 297 Total $594 The 100% markup to cover overheads is typical in this business. Overhead is thought to consist of 40% variable costs and 60% fixed Costs.
Professor Robinson (himself the author of the textbook and a very smart person) has offered to service all the clients with retirement planning (but not investment advice of tax planning) for a fee. This would include not only his time but also the textbook, the photocopying, and the computer simulation fee. Required (a) If Robinson's fee is $500 per client, should the offer be accepted? (b) If Robinson's fee is a lump sum of $50000, for which he would provide advice for up to 120 clients, should the offer he accepted?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started