Computer Retail Business Essay Example | Topics and Well Written Essays - 500 words

Computer Retail Business - Essay Example In order to determine the ability of the company to generate a profit the managers of the organization have to analyze the operations of the firm based on the costs and expenses that the company will incur during its initial start up phase and the variable and fixed expenses that the company will incur in the future (Weygand, Kieso, Kimmel, 2002). When the company decided to choose the corporate business structure the first costs the company incurred were the legal and governmental fees to incorporate. The firm spent $1,500 to incorporate the computer business. An estimate of the costs the company will incur is necessary to start a business. The company will purchase $30,000 in computers to be sold in the retail market. The markup on these computers is 40%. In order to complement the store the company sells other devices such as tablets, MP4 devices, and smartphones. The markup on these electrical devices is 50%. The company will invest an additional $10,000 in other electronic merchandise. In terms of computer parts the firm will invest $5,000. The original restoration of the lease rented as the retail outlet cost is $7,500. A start-up capital cost table of the company is illustrated below: The company needs $54,000 start up capital, but there are other expenses that the company must consider prior to starting the business. The $54,000 is the money needed to set up the business, but once the business starts the owners and managers have to consider a series of other operating expenses that will affect the financial outcome of the company. The administrative expenses of the firm are $2,000 a month which accounts for the salary of the manager. The company will run on three employees at all times in the floor. The salary of these employees is $7.25 an hour. The store is open twelve hours a day, thus the daily direct labor expense is $783 a day. The rent is $2,700 a month and