Resort Bicycle Rental

Resort Bicycle Rental

Bicycle Inventory Valuation
Friday, July 16, 2021

Number on Cost of Current Number of Total Rental Revenue

Make of Bike Bike Cost Hand Inventory Rentals Revenue per Bike
Wonder Bike $325 12 $3,900 85 $6,375 $531
Wonder Bike II $385 4 $1,540 34 $4,570 $1,143
Wonder Bike Supreme $475 8 $3,800 44 $5,200 $650
LiteLift Pro $655 8 $5,240 25 $2,480 $310
LiteLift Ladies $655 4 $2,620 40 $6,710 $1,678
LiteLift Racers $795 3 $2,385 37 $5,900 $1,967

3 Examples of decisions that management of the bike rental agency might make from this data:

The LiteLift Pro Bike has a high cost of inventory ($5,250), but the total revenue is low ($2,480). This results in
profit loss because the company is losing $2,760. The company should stop the rental service on this bike.
The Wonder Bike II has the cheapest cost of inventory ($1,540). With the total revenue being $4,570, the company
should increase the number of bikes on hand to keep making profit.
The LiteLift Ladies Bike has a cost of inventory of $2,620. With the total rental revenue being $6,710, the company
gains $4,090. This is the largest profit of all the bikes, the company should continue selling them.
With the conclusions above, it would be helpful to create a category of Profit Per Bike. We can create this with the
formula Profit Per Bike = Total Rental Revenue - Cost of Current Inventory.
(See in Second Version Worksheet)
 Resort Bicycle Rental

Revenue as
Percent of Cost
of Inventory
163.5%
296.8%
136.8%
47.3%
256.1%
247.4%

s data:

,480). This results in

vice on this bike.
eing $4,570, the company
ing $6,710, the company
g them.
e can create this with the
 Resort Bicycle Rental
Bicycle Inventory Valuation
Sunday, July 19, 2021

Number on Cost of Current Number of Total Rental Revenue per

Make of Bike Bike Cost Hand Inventory Rentals Revenue Bike
Wonder Bike $325 12 $3,900 85 $6,375 $531
Wonder Bike I $385 4 $1,540 34 $4,570 $1,143
Wonder Bike $475 8 $3,800 44 $5,200 $650
LiteLift Pro $655 8 $5,240 25 $2,480 $310
LiteLift Ladies $655 4 $2,620 40 $6,710 $1,678
LiteLift Racer $795 3 $2,385 37 $5,900 $1,967

I added in the Profit Per Bike category. This category will help management keep track of how well the bikes are do
the company. The company can then make changes based off of profit/loss. This helps the company financially, to k
track of what bikes to keep and what bikes to be taken off the rental service.
n

Revenue as Percent
of Cost of Profit Per
Inventory Bike
163.5% $2,475
296.8% $3,030
136.8% $1,400
47.3% -$2,760
256.1% $4,090
247.4% $3,515

rack of how well the bikes are doing for

elps the company financially, to keep