Component Cost Cost Type Cost type Projections

Student Wages 40 $/Hr. FC DL Type Percent

Manager Salary 40,000 $/Month FC DL Optimistic 50%
Lease Cost 30,000 $/Month FC DM Realistic 40%
Telephone Bills/Utilities 15,000 $/Month FC VOH Pessimistic 30%
Initall utility Deposit 7000$ FC FOH
Internet Lease 10,000$/Month FC DM
Internet Cost 60 $ Per Comp. Per Hour DM
Insure 10000$ Per Month FC VSGA
Marketing 10000$ Per Month FC VSGA
Additional Adds 20,000 $ FC FSGA
Other Upfront cost 50,000 $ FC FSGA
Per Drink cost 50$ DM
Per Food cost 30$ DM

1 All FC not in first year

2 Service Business Absorption & Variable costing is minimum Because of lack of inventory
3
4
5
6
7
8
9
10
11
12
13
Projections Other Data
Frequency Target Segment 20000
5 Times Seats 15 (3 per terminal)
3 Times Seats 15 Wine Lounge
2 Times Seats 20 General Area
Café Open 84 Hours, 6 Days/Week
Avg. No. of Employees 2/Day
Selling Price 120$/Hour
Time Slot 1 Hour
40% People Actually Pay
60% people Share PC or Lounge
Avg customer drink 140$
Food 60$
Workers Limit 15 Hrs/Week

Deal
Self 500,000 $
ck of inventory JTL 500,000 $
Loan 1,250,000 $ 10% Interest rate

EVC 104
 HF TJ SD Total
Sales 300000 500000 450000 1250000
VC 180000 100000 360000 640000
CM 120000 400000 90000 610000
FC 475800 * Do not distribute the FC
OI 134200
CMR per produtc 0.4 0.8 0.2
Weightage 0.24 0.4 0.36 0.488
WACMR 0.488
Breakeven Sales Revenue 975000 *Based on BSR, use weightage to caluclate the no. of uni
MOS 22

Breakeven gone up and WACMR reduced. Should not SD

MOS gone up, more shielded in terms of revenue
Since SD is not affecting FC, it means there is more scope for utilization of plant capacity. Earlier, un
to caluclate the no. of units of HF and TJ

plant capacity. Earlier, underutilized

 TAYLOR CORP KELLY CORP
REVENUES 80,000 160,000
VARIABLE EXPENSES 28,000 96,000
CONTRIBUTION MARGIN 52,000 64,000
FIXED EXPENSES
60,000 40,000
ALLOCATED ON REVENUE
TOTAL OPERATING COSTS 102,000 88,000
OPERATING INCOME 18,000 -8,000
MACHINE HOURS REQUIRED 1,000 1000

Double Kelly 116,000

Status quo 110,000
 TOTAL
200,000
90,000 80
110,000 28
100,000
190,000
10,000

k cm/hr 64
t 52
 Unit cost Cost for 10,000 units
Direct materials $4.00 $40,000
Direct manufacturing labor 2 20,000
Variable manufacturing overhead
1.5 15,000
(power and utilities)
Inspection, setup, materials handling 2,000
Machine rent 3,000
Allocated fixed costs of plant administration,
taxes, and insurance 30,000

TOTAL COST 110,000

In house cost outsource cost

110,000 112000

-110,000
In house 110,000
Buy

Benefit
200000
-180000 Cost variable
-16000
4000 -106,000