Introduction
Cost structure indicates all the costs that a business will incur while undertaking its operations. Various costs are associated with operating a business, such as fixed and variable costs (Freundlich & Frost, 2019). Fixed costs are the costs that occur in a business irrespective of the sales volume of activities in a business. They are costs that accumulate irrespective of time passage and whether or not a business is making profits. The fixed costs for Good Vibe Vacations will consist of the salaries for employees such as the marketing team, online technical teams, and tour guides. It will also include the marketing costs, rent for office space, and salaries for the customer service representatives. Variable costs are costs in a company that vary in direct proportion to the selling or production activities (Syverson, 2019). The variable costs will consist of things like hotel accommodation, costs, and the airline seats as it only depends on the number of guests attending. Fixed and variable costs are associated with the operations that occur in a business.
Discussion
Fixed costs such as the salaries for the marketing team who work for Good Vibes Vacations are estimated at $100 per week. All staff working for Good Vibes Vacations are paid weekly to ensure that the operations are running well. Paying workers every week is a way of motivating them to provide quality work, thus increasing the sales volume in the business (Dia & VanHoose, 2018). One of the main objectives of Good Vibes Vacations is to offer fun adventures to customers at a low cost. With the help of Jetstar Airlines, Good Vibes Vacations will be able to achieve this objective. The online technical team will be paid a salary of $50 a week. Their main job is to ensure that the target customers who are university student will complete their online bookings and that they have all the required information about each trip.
Marketing costs that are associated with promoting and advertising the business on social media or on-campus are estimated to around 50$ a week. Additionally, there will be another team apart from the marketing team that will act as the tour guides. The tour guides will make sure that the guests are entertained, and every operation in each team is running smoothly. The total costs that Good Vibes Vacations will pay to the tour guides in the form of salary are estimated to $70 in a week. The cost of renting an office space where Good Vibes Vacations will provide all the in-person services will be $600 in a month.
Customer service representatives that focus on building a relationship with the potential customers and the existing ones will be paid a salary of around $60 every week. The customer service team will ensure that the guests are entertained while on holiday, clients’ disputes are handled and that all inquiries are addressed properly. Variables costs such as hotel accommodation that is outsourced by Good Vibes Vacations as it is cost-effective will be estimated at an overall cost of $80 in a week (Liu & Tyagi, 2017). The travel insurance, which is also outsourced, will be estimated to around $30 a week. Moreover, the costs of hiring the airline seats, which depend on the number of guests that will be attending, are estimated to $45 in a week.
Conclusion
The cost structure of a business is composed of all the costs that a business will incur to keep the business in operation. Variable costs and fixed costs are some of the costs that are associated with running a business, such as Good Vibes Vacations. Fixed costs include costs for renting an office space, marketing costs, cost for hiring the tour guides as well as the marketing team, customer service representatives, and salaries for the online technical teams. Nevertheless, the variable costs that Good Vibes Vacations will incur in its operation include hotel accommodation, airline seats that depend on the guests that are attending, and the costs for the travel insurance.
References
Dia, E., & VanHoose, D. (2018). Fixed costs and capital regulation: Impacts on the structure of banking markets and aggregate loan quality. Journal of financial stability, 36, 53-65. Web.
Freundlich, G. E., & Frost, C. J. (2019). Variable costs and benefits of eavesdropping a green leaf volatile on two plant species in a common garden. bioRxiv, 370692. Web.
Liu, Y., & Tyagi, R. K. (2017). Outsourcing to convert fixed costs into variable costs: A competitive analysis. International Journal of Research in Marketing, 34(1), 252-264. Web.
Syverson, C. (2019). Macroeconomics and market power: Context, implications, and open questions.Journal of Economic Perspectives, 33(3), 23-43. Web.