Question Details

Answered: - Bre' Harris April 6, 2016 BMG1101 Columbus State Comm


directions to the question are in the attached form. im confused on the math and how to come up with these calculations.?thank you


Bre? Harris

 

April 6, 2016

 

BMG1101

 


 

Columbus State Community College

 

BMGT1101 - Principles of Business

 

Writing Assignment Two

 

1

 

Scenario:

 

Your best friend inherited a large sum of money from a distant Aunt and

 

wants to start his own small business. He has narrowed his choices to two

 

options and since you are taking business classes at CSCC, he has asked

 

you to review his plans with recommendations on their feasibility.

 

Option One:

 

Operation:

 

Burger shop on Cleveland Avenue near CSCC.

 

Menu:

 

Similar to Five Guys with hamburger, soda drinks,

 

and fries.

 

Location:

 

500 Square feet with kitchen and eat in dining for

 

approximately 18 customers.

 

Hours of Operation:

 

12 hours per day from 10am - 10pm, 7 days a week.

 

Estimated Fixed and Variable Costs:

 

Fixed Costs:

 

Yearly Building Lease: $90,000

 

Yearly Utilities Costs: $48,000

 

Yearly Marketing Expense Budgeted: $12,000

 

Owner Salary/Year: $50,000

 


 

Variable Average Costs: $3.50 per customer

 

?

 

Estimated Sales:

 

o

 

Average Sale per Customer: $10.00

 

Calculation based on:

 

?

 

$7.50 per burger

 

?

 

$1.30 for soda fountain drink

 

?

 

$1.20 for fries

 

Option Two:

 

?

 

Operation:

 

Franchised mobile ice cream truck.

 

?

 

Menu:

 

Similar to Dippin? Dots.

 

Location:

 

Able to travel depending on the event, crowd, day,

 

or time.

 

Hours of Operation:

 

10 hours per day from 12pm - 10pm, 7 days a week.

 

Estimated Fixed and Variable Costs:

 

Fixed Costs:

 

Yearly Franchisee Cost: $15,000

 

Yearly Gasoline Budget: $12,000

 

Yearly Food Safety License: $1,000

 

Variable Average Costs: $1.50 per customer

 

Estimated Sales: Average Sale per Customer: $5.00

 


 

Write an Executive Summary addressing the following points for your

 

friend:

 

Conduct a break even analysis on BOTH options using

 

Only the costs provided?

 

(Worth 20

 

Points)

 

HINTS:

 

?

 

Be sure to break it down to how many customer sales are needed per

 

HOUR of operation.

 

?

 

Do some research. How do the average sales compare to other

 

competitors for example?

 

?

 

Attach a chart with your calculations

 

(Graphs are not necessary ? Just show details of your math!)

 

Discuss which option you believe is the better investment: (Worth 10

 

points)

 

Which plan seems more feasible?

 

Is he missing any possible expenses?

 

Other issues, suggestions, or changes you might explore?

 


 

 


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