Question

You are considering opening up a coffee shop.  It will be a straightforward place that sells various...

You are considering opening up a coffee shop.  It will be a straightforward place that sells various brews of coffee.  But the first thing you want to understand is what the projection of net income will be under different scenarios.
To do the upfront analysis you have accumulated data on all the costs related to running a coffee shop.  These costs and sales revenue, noted below, represent all the costs you can think of based on your vision of the coffee shop.
You are the business owner, but you won't take a salary.  Your earnings will be based on how much Net Income the coffee shop makes.

Classify each cost as fixed or variable (see below)
Rent Monthly
Utilities Monthly
Insurance Annually
Water Quarterly
Coffee Making Equipment - Depreciation (based on cost of $12,000 and a 5 year life and zero salvage value) Annually
Table and Chair Rental Monthly
Laptop and Credit Card Scanner - Depreciation (based on cost of $4,800 with a 4 year useful life and zero salvage value) Annually
Barrista Salary Annually
Other Miscellaneous Costs Monthly
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Classify each cost as fixed or variable (see below)
Rent Monthly Fixed
Utilities Monthly Fixed
Insurance Annually Fixed
Water Quarterly Variable
Coffee Making Equipment - Depreciation (based on cost of $12,000 and a 5 year life and zero salvage value) Annually Fixed
Table and Chair Rental Monthly Fixed
Laptop and Credit Card Scanner - Depreciation (based on cost of $4,800 with a 4 year useful life and zero salvage value) Annually Fixed
Barrista Salary Annually Fixed
Other Miscellaneous Costs Monthly Fixed
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An investor borrows $200,000 (in year zero) at an annual interest rate of 10%. The equipment...
An investor borrows $200,000 (in year zero) at an annual interest rate of 10%. The equipment purchased with the borrowed money will produce revenues of $90,000 annually and has operating costs of $15,000 annually for Years 1 through 5. The capital cost is depreciable over 6 years (from year 0 to year 5) based on MACRS 5-year life depreciation with the half year convention (table A-1 at IRS). The machine has no salvage value and there is no working capital...
1. You purchased a machine for $ 1.16 million three years ago and have been applying​...
1. You purchased a machine for $ 1.16 million three years ago and have been applying​ straight-line depreciation to zero for a​ seven-year life. Your tax rate is 38 %. If you sell the machine today​ (after three years of​ depreciation) for $ 775 000​ what is your incremental cash flow from selling the​ machine? Your total incremental cash flow will be ​$ nothing. ​(Round to the nearest​ cent.) 2. Daily Enterprises is purchasing 10.3 million machines. It will cost...
Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense...
Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise: A suitable location in a large shopping mall can be rented for $4,000 per month. Remodeling and necessary equipment would cost $348,000. The equipment would have a 20-year life and a $17,400 salvage value. Straight-line depreciation would be used, and the salvage value would be...
You are considering a new product launch. The project will cost $1,232,500, have a five-year life,...
You are considering a new product launch. The project will cost $1,232,500, have a five-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 310 units per year; price per unit will be $19,300, variable cost per unit will be $15,800, and fixed costs will be $329,000 per year. The required return on the project is 13 percent, and the relevant tax rate is 35 percent. Based on your experience, you think the unit...
Cash Flow Estimation: Example 1: You are considering expanding your product line. You feel you can...
Cash Flow Estimation: Example 1: You are considering expanding your product line. You feel you can sell 100,000 of these products per year for 4 years (after which time this project is expected to shut down). The product will sell for $6 each, with variable costs of $3 for each one produced, while annual fixed costs associated with production will be $90,000. In addition, there will be a $200,000 initial expenditure associated with the purchase of new production equipment. It...
You are considering a new product launch. The project will cost $982,000, have a four-year life,...
You are considering a new product launch. The project will cost $982,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 300 units per year; price per unit will be $19,200, variable cost per unit will be $15,700, and fixed costs will be $328,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 40 percent. Based on your experience, you think the unit...
Aurora Company is considering the purchase of a new machine. The invoice price of the machine...
Aurora Company is considering the purchase of a new machine. The invoice price of the machine is $123,000, freight charges are estimated to be $4,000, and installation costs are expected to be $5,000. Salvage value of the new equipment is expected to be zero after a useful life of 5 years. Existing equipment could be retained and used for an additional 5 years if the new machine is not purchased. At that time, the salvage value of the equipment would...
8.      You are considering a new product launch. The project will cost $680,000, have a four-year...
8.      You are considering a new product launch. The project will cost $680,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 100 units per year, price per unit will be $19,000, variable cost per unit will be $14,000, and fixed costs will be $150,000 per year. The required return on the project is 15%, and the relevant tax rate is 35%. Ignore the half-year rule for accounting for depreciation.         ...
Expand Your Critical Thinking 7-1 Aurora Company is considering the purchase of a new machine. The...
Expand Your Critical Thinking 7-1 Aurora Company is considering the purchase of a new machine. The invoice price of the machine is $109,000, freight charges are estimated to be $3,000, and installation costs are expected to be $5,000. Salvage value of the new equipment is expected to be zero after a useful life of 5 years. Existing equipment could be retained and used for an additional 5 years if the new machine is not purchased. At that time, the salvage...
Course Project Week 4 For this next part of the project you will build the Income...
Course Project Week 4 For this next part of the project you will build the Income Statement and Balance Sheet for the Bike Repair & Maintenance Shop (BRMS) for 2018. Use the information below and add another sheet to your Excel Workbook. BRMS Information for 2018 In 2017, the repair shop was opened in October and ended the year with a ($10,500) operating loss. Supply Inventory of parts & supplies maintained $3,000 Replacement parts are ordered as they are used....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT