Business Management
Business Management tests the funeral home as an operation: pricing, cost behavior, staffing, inventory, recordkeeping, and cash control. The exam expects you to connect management decisions to solvency and to the regulated trust environment.
Core tools
- Separate fixed costs (facility, licenses, base staff) from variable costs (casket, urn, embalming supplies, per-call labor).
- Contribution margin = average revenue per call − variable cost per call; break-even calls = fixed costs ÷ contribution margin.
- Price from fully loaded cost, not from competitor rumor; build a fee schedule that separates professional services, facilities, and merchandise.
- Keep pre-need trust funds separate from operating cash; trust money is not working capital.
Worked example
Fixed costs are $180,000 per year. Average revenue per call is $6,000; variable cost is $2,500. Contribution margin is $3,500. Break-even = $180,000 ÷ $3,500 = 51.4, so the home needs 52 calls to cover fixed costs. At 60 calls, projected profit is 60 × $3,500 − $180,000 = $30,000 before taxes.
Traps
Pricing below fully loaded cost to “win” calls. Using pre-need trust deposits to cover payroll. Ignoring on-call and overtime labor as variable cost. Expanding inventory without measuring turnover. Treating a high revenue month as proof of profitability.