Case Report Beach SUP Business due: Thursday, March 9 You may form a group of two or three for this case, or complete it individually. If you're in a GROUP, only one member needs to submit on Brightspace, but be sure to note all names (first & last name, don't need A#s) of ALL group members on the final PDF doc. This case will require you to prepare a CM Income Statement for one month of the upcoming summer business season. Prepare basic CM Income Statements in Excel, with all "options" shown on one sheet. You will have four basic CM Income Statements: the "BASE CASE" CM Income St, and CM Income St for OPTIONS 1, 2 & 3. Each CM Income Statement should be ONE MONTH (not the entire 3-month summer)- Once you have finished your work on Excel, answer the questions A to D below on MS Word. Save your final MS Word doc as a PDF, and then upload ONE pdf and ONE Excel file to BrSpace for your case report. Your Excel doc must have the formulas entered (in cells), but the visible work should be clear and uncluttered. Your MS Word doc must be to workplace standards: use SINGLE-SPACING only. Leave a row space between sections of your written answers. Label and highlight (bold) your key answers. Do your best to write using correct grammar and wording in your written answers. Use Calibri font, 11-point size. Your final Case Report should be no more than one page. Once your MS Word doc is prepared, you should save your final copy as a pdf to ensure formatting is consistent when opened for grading. Grading: 45% format, clarity, grammar; $5% Excel file & pdf. GRADING: 50 points total 22 points: format of PDF doc uploaded, grammar, concise wording, organization, single-spacing, short, clear headings or labels (answers to A, B, C, D) ; Excel doc must have formulas in cells; organized, clean. 14 points: answers to A, B, C & D. (Your answer to A will be on the Excel file doc. Answers to B, C, D will be on the MS Word doc > PDF doc. 14 points: Excel CM Income Statements; formulas, organization (see sample XL file); ratios. Case Questions: A. Calculate CM Ratio and DOL (degree of operating leverage) for the base income statement and all three options. The answers to this question will be shown on your Excel file below each income statement. B. Which option (of the three given) would provide the highest CM (contribution margin) and which would provide the highest profit? Explain why your choice is most profitable in 10 words or less. C. Which option is best for next year based on both CM Ratio and DOL? Explain clearly in 10 words or less. Your answer should include the type of analytic information that DOL tells us. D. What other factors and costs would you consider, if you were to open and operate a business like this? Name three, and briefly state how they might impact the risk of profitability; 15 words or less.CASE Beach SUP Company Matt, Angad and Alina are university students who own "Beach SUP", a small business that rents stand-up paddle boards (SUP boards) on Crescent Beach, Nova Scotia. SUP boards are becoming more popular as a summer water sport as it is relatively easy to learn, is fun and provides physical benefits from strength and balance to relaxation and outdoor, laid-back lifestyle. Currently, Beach SUP has not spent any money on advertising, and it is the only company renting SUP boards on Crescent Beach. They chose this beach because it is the only beach in and the beach is kilometres long- The business operates for three months, from June 1 to August 31. Beach SUP owns four SUP boards, which it rents out for $25 per hour each. The owners estimate that boards are rented for 600 hours per month (4 boards x 30 days x 5 hours per day). Beach SUP hires a summer student, Nadia, to help with rentals. Nadia is paid $21 per hour for 5 hours per day (30 days per month). For each hour that a paddle board is rented, the business incurs $3 supplies (wax, etc) to prepare the boards. Beach SUP fixed costs include rent and salaries. The busin usiness rents a beach kiosk for $1,500 per month during the three summer months. They store business items in parents' base ents during the other 9 months for free. Angad is paid a salary of $3,000 per month because he works full time for Beach SUP during the three summer months. Matt and Alina have other full time summer jobs, but they share in the busi [and initially invested in the busines and help to m ons. Beach SUP purchased the four boards two years ago for $1,080 each. The boards are depreciated on a straight-line basis and are estimated to have a 3-year life. NOTE: Depreciation ense is ONLY deducted, or reco ded, in the three su r months: determine the ann depreciation amount, and allocate this The three friends believe that the bu ome on Crescent Beach. They are considering a few different options for next summer to boost profits and give them more money for expenses during the school year. As well, each of the three owners would like to invest part of their portion of business earnings in the TSX stock market. OPTION 1 By extending hours of operation from 5 hours per day to 7 hours per day, Beach SUP could increase revenues. There would be no change to the rental fee of $25 per hour, but Angad would want $1,200 additional salary per month and Nadia would be working two extra hours per day, at the same hourly rate. OPTION 2 Some potential customers are unsure of using paddle boards and would benefit from a lesson. This option would include a 15- minute lesson in the first part of the hour rental. The price would increase from $25 to $35 per hour. The business would operate 6 hours per day, with Nadia working all 6 hours, however with the turnaround time, the business could only rent the four SUP boards 5 hours each day. Angad would be paid $3,800 salary per month. Assume that all rentals in this option include the lesson. OPTION 3 Instead of offering lessons, Beach SUP could consider advertising, bringing more customers to the beach. This would result in rentals for & hours each day (at $25 per hour). Advertising would cost $1,000 per month for the three months. Nadia could work all & hours each day and help with lessons, but instead of working 30 days per month Nadia would work 24 days per month. Angad would require $1,300 additional salary ($4,500 per month)