Impact of procurement on return on assets

Turnover
(revenue)

Total costs

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 The BAR CASE
Revenue Scheme per month Costs for Drinks
Price for Whiskey 3 EUR Cost per Whiskey 1,2 EUR
Price for a Beer 2,8 EUR Cost per Beer 1 EUR
Price for a ClubMate 2,6 EUR Cost per ClubMate 1 EUR
Number of Whiskey's per month 1000 EUR Number of Whiskey's per month 1000
Number of Beer's per month 4000 EUR Number of Beer's per month 4000
Number of ClubMate 2000 EUR Number of ClubMate 2000
T otal monthly Revenue 19400 EUR T otal Beverage Cost 7200 EUR
Costs for other materials
Number of Peanuts served 3500
Costs Price for Peanuts serving 0,3 EUR
Investment T otal Fixed Assets (T ables, Chairs, Glases, …) 30.000 EUR T otal Peanut Cost 1050 EUR
Interest rate 10% EUR Others (straws, papers, ice-cubes) 600 EUR
Yearly payback / depreciation 6000 EUR Energy cost 600 EUR
Yearly payment Fixed Assets 9000 EUR T otal cost other consumables 2250 EUR
Current Assets (Serves per T ype) 6400 EUR
2000 6400 EUR Total Material Costs 9.450
Interest payment for current assets 640
Monthly interest Payment 803,3 EUR T otal Cost 18.253 EUR
Total Capital employeed 36.400 T otal Revenues 19.400 EUR

monthly Earnings 1.147 EUR

EBIT 1.950
Rent for the Bar-Room 3000 EUR
Workforce Number of employees 5 Margin 5,9%
Cost per Employee per month (including Tax…) 1000 EUR Capital Turnover Ratio 53,3%
T otal Labour Cost 5000 EUR ROCE / RONA 3,2%

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Impact of procurement on return on assets
Evaluating the bar cases

Idea / Approach Profit Potential Profit Margin / RONA

Increase Sales by 10%

Reduce Material Costs by

15%
Reduce Labor Costs by 10%

Reduce Capital Costs by 15%

Please split in four groups and calculate the effects on total profit,
Margin and ROCE

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