Course Project Week 4
For this next part of the project you will build the Income Statement and Balance Sheet for the Bike Repair & Maintenance Shop (BRMS) for 2018. Use the information below and add another sheet to your Excel Workbook.
BRMS Information for 2018
In 2017, the repair shop was opened in October and ended the year with a ($10,500) operating loss.
Supply Inventory of parts & supplies maintained
$3,000
Replacement parts are ordered as they are used.
Shop hours of operation: 52 weeks a year.
Monday - Friday 11am - 7pm
8 hrs
Saturday 9am - 7pm
10 hrs
Staff
FTEs
Salary
Manager
1
$ 40,000
bookkeeper/purchaser
0.8
$ 20/hr
Repairers
2.5
$ 18.50/hr
Employee benefits: 20% of salary for the manager; 17% of salary for all others.
Supply costs
$ 65,000
utility costs
$ 7,200
marketing costs
$ 10,000
other costs
$ 22,000
Services Provided:
Budgeted: Repair Services: $100 each for 2,600 repairs
New Packages being considered
Package A: Preventative maintenance service package $ 80
Package B: Basic inspection, lube, adjust & clean shifting braking system $ 90
Package C: Annual peak performance package $100
Package D: Basic inspection, + replace shifting cables & preventative maintenance package $250
Estimated Services Provided under the new options:
Package A: 25 per week
Package B: 15 per week
Package C: 10 per week
Package D: 5 per week
Bike Repair & Maintenance Shop
Budgeted Income Statement
For the Year Ended December 31, 2018
Revenue
Repair Fees
?
Other Income
?
Gross Revenues
?
Expenses
Salaries & Benefits
?
Wages & benefits
?
Utilities
7,200
Marketing costs
10,000
Supply costs
65,000
Other costs
22,000
Total Expenses
104,200
Operating Income
?
Income tax
?
Net Income
$(43,692)
Profit Margin
?
a) For the first full year of operations, BRMS was budgeted to lose over $40,000 performing repair services. These repairs have high fixed costs for the replacement parts in the repairs. If BRMS decided to expand their services to provide bicycle inspections and preventative maintenance, which use more employee time than supplies, what would the projected change in profit be?
b) If a decision is made to add more service oriented repairs is there a change in fixed and variable costs for repair services?
c) Complete a new ACTUAL Income Statement based on your decisions in a & b. Then complete the Balance sheet below.
Bike Repair & Maintenance Shop
Balance Sheet
December 31, 2018
Assets
Cash
$ 8,500
Investments
-
Accounts Receivable (net)
6,000
Prepaid Expenses
3,000
Inventory
?
Plant, Property & Equipment
5,000
Less: Accumulated Depreciation
(167)
Total Assets
$ 25,333
Liabilities
Accounts Payable
$ 4,500
Accrued Liabilities
700
Salaries Payable
4,000
Long-term liabilities
-
Total Liabilities
$ 9,200
Common Stock
?
Retained Earnings
?
Total Stockholders' Equity
?
Total Liabilities & Stockholders' Equity
?
Next Steps: Financial Analysis for both BRBS & BRMS.
Using the information below for BRBS complete the financial metric analyses as indicated in Chapter 9 of the textbook for both BRMS (above) & BRBS.
The Income Statement for the Buy-Right Bike Shop is provided below for 2017 and 2018.
BUY-RIGHT BIKE STORE
Income Statement
2018
2017
Sales - Online
$ 11,080,000
$ 6,240,000
Sales - In store
580,400
312,000
Sales returns
221,600
Gross Revenues
11,438,800
6,552,000
Cost of Goods sold
5,540,000
3,276,000
Contribution Margin
$ 5,898,800
$ 3,276,000
Expenses
Salaries & Benefits
$ 144,000
$ 139,206
Wages & benefits
391,880
274,997
Utilities
13,200
13,000
Marketing costs
200,000
200,000
Contributions & Community Involvement
58,040
31,200
Other costs
1,375,000
1,200,000
Operating Income
3,716,680
1,417,597
Income tax
1,077,837
411,103
Net Income
$ 2,638,843
$ 1,006,494
Profit Margin
23%
15%
Sales volume
Bike C - online
95,000
60,000
Bike A - online
4,800
-
Bike C - in store
5,100
3,000
Bike A - in store
200
-
total Sales volume
100,000
63,000
The Balance Sheet for Buy-Right Bike Store is provided below:
Buy-Right Bike Store
Balance Sheet
December 31, 2018
Assets
Cash
$ 1,500,000
Investments
225,000
Accounts Receivable (net)
1,250,000
Prepaid Expenses
30,000
Inventory
58,280
Plant, Property & Equipment
1,800,000
Less: Accumulated Depreciation
60,000
Total Assets
$ 4,923,280
Liabilities
Accounts Payable
83,250
Accrued Liabilities
4,414
Salaries Payable
7,913
Long-term liabilities
30,000
Total Liabilities
$ 125,577
Common Stock
1,152,366
Retained Earnings
3,645,337
Total Stockholders' Equity
$ 4,797,703
Total Liabilities & Stockholders' Equity
$ 4,923,280
Course Project Week 4
For this next part of the project you will build the Income Statement and Balance Sheet for the Bike Repair & Maintenance Shop (BRMS) for 2018. Use the information below and add another sheet to your Excel Workbook.
BRMS Information for 2018
In 2017, the repair shop was opened in October and ended the year with a ($10,500) operating loss.
| Supply Inventory of parts & supplies maintained | $3,000 | |
| Replacement parts are ordered as they are used. | ||
| Shop hours of operation: 52 weeks a year. | ||
| Monday - Friday 11am - 7pm | 8 hrs | |
| Saturday 9am - 7pm | 10 hrs | |
| Staff | FTEs | Salary |
| Manager | 1 | $ 40,000 |
| bookkeeper/purchaser | 0.8 | $ 20/hr |
| Repairers | 2.5 | $ 18.50/hr |
Employee benefits: 20% of salary for the manager; 17% of salary for all others.
| Supply costs | $ 65,000 |
| utility costs | $ 7,200 |
| marketing costs | $ 10,000 |
| other costs | $ 22,000 |
Services Provided:
Budgeted: Repair Services: $100 each for 2,600 repairs
New Packages being considered
Package A: Preventative maintenance service package $ 80
Package B: Basic inspection, lube, adjust & clean shifting braking system $ 90
Package C: Annual peak performance package $100
Package D: Basic inspection, + replace shifting cables & preventative maintenance package $250
Estimated Services Provided under the new options:
Package A: 25 per week
Package B: 15 per week
Package C: 10 per week
Package D: 5 per week
| Bike Repair & Maintenance Shop | |
| Budgeted Income Statement | |
| For the Year Ended December 31, 2018 | |
| Revenue | |
| Repair Fees | ? |
| Other Income | ? |
| Gross Revenues | ? |
| Expenses | |
| Salaries & Benefits | ? |
| Wages & benefits | ? |
| Utilities | 7,200 |
| Marketing costs | 10,000 |
| Supply costs | 65,000 |
| Other costs | 22,000 |
| Total Expenses | 104,200 |
| Operating Income | ? |
| Income tax | ? |
| Net Income | $(43,692) |
| Profit Margin | ? |
a) For the first full year of operations, BRMS was budgeted to lose over $40,000 performing repair services. These repairs have high fixed costs for the replacement parts in the repairs. If BRMS decided to expand their services to provide bicycle inspections and preventative maintenance, which use more employee time than supplies, what would the projected change in profit be?
b) If a decision is made to add more service oriented repairs is there a change in fixed and variable costs for repair services?
c) Complete a new ACTUAL Income Statement based on your decisions in a & b. Then complete the Balance sheet below.
| Bike Repair & Maintenance Shop | |
| Balance Sheet | |
| December 31, 2018 | |
| Assets | |
| Cash | $ 8,500 |
| Investments | - |
| Accounts Receivable (net) | 6,000 |
| Prepaid Expenses | 3,000 |
| Inventory | ? |
| Plant, Property & Equipment | 5,000 |
| Less: Accumulated Depreciation | (167) |
| Total Assets | $ 25,333 |
| Liabilities | |
| Accounts Payable | $ 4,500 |
| Accrued Liabilities | 700 |
| Salaries Payable | 4,000 |
| Long-term liabilities | - |
| Total Liabilities | $ 9,200 |
| Common Stock | ? |
| Retained Earnings | ? |
| Total Stockholders' Equity | ? |
| Total Liabilities & Stockholders' Equity | ? |
Next Steps: Financial Analysis for both BRBS & BRMS.
Using the information below for BRBS complete the financial metric analyses as indicated in Chapter 9 of the textbook for both BRMS (above) & BRBS.
The Income Statement for the Buy-Right Bike Shop is provided below for 2017 and 2018.
| BUY-RIGHT BIKE STORE | ||
| Income Statement | ||
| 2018 | 2017 | |
| Sales - Online | $ 11,080,000 | $ 6,240,000 |
| Sales - In store | 580,400 | 312,000 |
| Sales returns | 221,600 | |
| Gross Revenues | 11,438,800 | 6,552,000 |
| Cost of Goods sold | 5,540,000 | 3,276,000 |
| Contribution Margin | $ 5,898,800 | $ 3,276,000 |
| Expenses | ||
| Salaries & Benefits | $ 144,000 | $ 139,206 |
| Wages & benefits | 391,880 | 274,997 |
| Utilities | 13,200 | 13,000 |
| Marketing costs | 200,000 | 200,000 |
| Contributions & Community Involvement | 58,040 | 31,200 |
| Other costs | 1,375,000 | 1,200,000 |
| Operating Income | 3,716,680 | 1,417,597 |
| Income tax | 1,077,837 | 411,103 |
| Net Income | $ 2,638,843 | $ 1,006,494 |
| Profit Margin | 23% | 15% |
| Sales volume | ||
| Bike C - online | 95,000 | 60,000 |
| Bike A - online | 4,800 | - |
| Bike C - in store | 5,100 | 3,000 |
| Bike A - in store | 200 | - |
| total Sales volume | 100,000 | 63,000 |
The Balance Sheet for Buy-Right Bike Store is provided below:
| Buy-Right Bike Store | ||
| Balance Sheet | ||
| December 31, 2018 | ||
| Assets | ||
| Cash | $ 1,500,000 | |
| Investments | 225,000 | |
| Accounts Receivable (net) | 1,250,000 | |
| Prepaid Expenses | 30,000 | |
| Inventory | 58,280 | |
| Plant, Property & Equipment | 1,800,000 | |
| Less: Accumulated Depreciation | 60,000 | |
| Total Assets | $ 4,923,280 | |
| Liabilities | ||
| Accounts Payable | 83,250 | |
| Accrued Liabilities | 4,414 | |
| Salaries Payable | 7,913 | |
| Long-term liabilities | 30,000 | |
| Total Liabilities | $ 125,577 | |
| Common Stock | 1,152,366 | |
| Retained Earnings | 3,645,337 | |
| Total Stockholders' Equity | $ 4,797,703 | |
| Total Liabilities & Stockholders' Equity | $ 4,923,280 | |
