Essay Cafè Xaragua

Critically evaluate the assumptions on which your forecasts are based. What developments could alter your results? Is Mr. Cowins correct in his belief that Hampton can repay the loan in December?

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

David owns the building out of which he operates a small graphic arts business. He has extra space available and is considering converting the extra space into a gourmet coffee shop that he would also run. A local businesswoman has offered to rent the extra space from him for her own needs. She has suggested she would be willing to pay $1,000 a month in rent. In estimating the cash flows associated with the gourmet coffee shop, David should

The company expects to generate at least in annual sales by the end of the first year of operations with a gross margin of %. The company will incur higher expenses for startup

Next we find the amount contributed from each Customer to the overall general and selling expenses based on the number of cartons ordered by each. The end result leads us to each customers overall profitability.

Your response Exercise 5-1 Fixed and Variable Cost Behavior [LO1] Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22. Requirement 1: Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round average cost per cup of coffee to 3 decimal places. Omit the "$" sign in your response.) 2,000 Fixed cost Variable cost Total cost Average cost per cup of coffee served $ $ $

3. Explain the difference in profitability of the five orders calculated by the ABC system and the company’s existing cost system.

4. Answer the three discussion questions for the case study except the part requiring me to justify the forecasting technique, as linear regression would be used.

The annual cost projections for Bernoulli with $18M for the year 12/31/2004 is the cost of good sold(COGS) multiply with the original cost of goods sold proportion, 60% and for the rest, afterwards the year of 12/31/2005 until 12/31/2009 is where values of

3. What is the company’s sustainable growth rate based on the projections for 2002 and 2003? Is the company growing beyond its financial capabilities?

3. Using activity-based costing, it is evident that the most profitable customer is R, which is also the largest customer. This company contributes most of the company's total profit. The figures also reveal that while Q and P contribute profit to the company, T does not. This customer costs the company $3260 in loss. This loss is attributable to a couple of key factors. One is the distance to the customer, which is by far the highest. The other is the high number of purchase orders and deliveries relative to the number of total bottles sold. Customer T is making a lot of small orders and the result is that the

How many customer visits will CIC need in order for the Café to break-even in year 1? Year 2?

| Own brand | E-commerce | Bargain market | Price | BBQ: $600 | BBQ: $620 | BBQ: $500 | Price | Furniture: $850 | Furniture: $880 | Furniture: $650 | Price | Accessories: $50 | Accessories: $55 | Accessories: $40 | Unit contribution margin | BBQ: $500 | BBQ: $300 | BBQ: $200 | Unit contribution margin | Furniture: $600 | Furniture: $420 | Furniture: $220 | Unit contribution margin | Accessories: $40 | Accessories: $20 | Accessories: $10 | Total revenue | 8988000 | 15732000 | 10350000 | Total gross profit 2012/13 | 7084800 | 164000 | 3625000 | Additional fixed costs | Add lease $1000000 Add labour $500000 Add plant (depreciation): $500000 | Add training: $50000 Add online store development: $100000 Add new plant and equipment (depreciation): $150000 Add labour: $250000 Add reconfiguration of warehouse/office: $50000 | See approved budget (no change in fixed costs) | Total net profit 2012/13 | 200086 | 1679286 | 1259714

Things could not be going any better for this business. We will be exceeding the goal of $8.5 million in sales. The expected expense of cost of goods sold are only 88 percent of sales, and the fixed operating costs to be held at $30,000 a month. The variable costs are expected to average about 5 percent of sales. Even with these costs, the business’ profits are expected to be close to a quarter of a million dollars before taxes.

We present four scenarios (modest, reasonable expected, excellent and worst case) in our projections. We project out five years (years 1 to 5). We use the contribution margin income statement format with the financial projections. Variable costs include the materials and variable payroll. Fixed costs include the rent and electricity. Sales and variable costs are based on units or sandwiches and other products sold at the shop.