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CASE 2 : V & A CARPET CLEANING SERVICES In March 2 0 0 3 , Vincent and Anne - Marie Finney started their carpet
CASE : V & A CARPET CLEANING SERVICES
In March Vincent and AnneMarie Finney started their carpetcleaning services
business in Toronto. The business was geared primarily at young couples, a
market that they felt was growing rapidly. Vincent and AnneMarie had worked
during the previous years as salaried employees for different types of organizations.
They were frustrated with the fact that their future was in the hands of employers, so
they decided to start V & A Carpet Cleaning Services. After years of tremendous
success in the business, the couple decided to launch a franchise.
They placed advertisements in different daily newspapers across Canada promoting
the franchise business. Bill and Jill Robinson of Ottawa saw the advertisement and
called V & A for information about the economics and advantages of managing a
carpetcleaning franchise operation. The Finneys provided the following information:
Average revenue for cleaning carpets in each household is $
A sales commission per contract is secured by a sales representative.
Machine operators receive $ for cleaning the carpets in each household.
Average costs for gas and maintenance for trucks for each household is $
Maintenance charges are $ per machine for each houses cleaned.
Monthly rental charges for office and small warehouse for inventories is
$
Annual depreciation for the equipment is $
Monthly salary paid to Bill and Jill would total $
Other costs include the following:
A $ monthly salary for office employees.
A $ yearly expense for various insurance policies.
A $ monthly expense for utilities and telephone.
A yearly $ fee for the franchise.
A $ franchise fee for each household cleaned.
Questions
On the basis of the above information, calculate the following:
How many carpets would Bill and Jill have to clean each year to start
making a profit?
How much revenue would they have to earn each year in order to
break even?
How many carpets would they have to clean each year if they want to
earn a yearly profit of $ before tax?
Prepare a statement of income on the basis of earning $ in
profitbeforetaxFINANCIAL SPREADSHEETS: EXCEL
Templates and of the decisionmaking tools of the financial spreadsheets
a ccompanying this book can calculate the breakeven points by using the c ontribution
margin and the PV ratio. Template BreakEven Analysis Using the Contribution
Margin calculates the breakeven point, in units and in revenue, of a business d ecision
by using the contribution margin. Template BreakEven Analysis Using the PV
Ratio calculates the revenue breakeven point by using the PV ratio. The breakeven
point for these two templates can be done for three consecutiveyears
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