Consider the 5-year data information provided in the Sheet (Exhibits 3 and 5). Conduct a mixed costs analysis of the Zip Car company and identify the risks Zip car might face based on this analysis
I am a little confused about what to do with "mixed costs analysis for Zipcar".
I started to do a CVP but the ratio and margin are all pretty good so there is no talking point, cost per unit (Fixed and Variable) but super lost.
Exhibit 1 Economics of Individual Car Ownership Monthly Expenditures Vehicle depreciation/Lease Insurance Parking Gas Maintenance Total Source: Casewriter analysis based upon company data. Monthly Costs $270 99 125 45 36 $575 Exhibit 2 Population of Top 20 U.S. Markets City 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Los Angeles-Long Beach New York Chicago Philadelphia Detroit Washington, D.C. Miami-Ft. Lauderdale Boston Minneapolis-St. Paul St. Louis Baltimore Anaheim-Santa Ana Pittsburgh Seattle Cleveland Newark San Francisco San Jose Milwaukee Bergen-Passaic Counties, N.J. TOTAL Population (millions) Households (millions) 8.9 8.5 6.0 4.9 4.4 3.9 3.2 2.9 2.5 2.5 2.4 2.4 2.0 2.0 1.8 1.8 1.6 1.5 1.4 1.3 65.9 3.42 3.27 2.31 1.88 1.69 1.50 1.23 1.12 0.96 0.96 0.92 0.92 0.77 0.77 0.69 0.69 0.62 0.58 0.54 0.50 25.35 Density per sq. mile Source: U.S. Census,
, accessed December 9, 2002. 2,183 7,447 3,221 1,380 981 989 1,012 1,631 487 458 913 3,052 604 468 1,211 1,495 1,579 1,159 996 3,049 Exhibit 3 Original Financial Plan for Boston, December 1999 Assumption (per unit) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Revenues Trips/member/month miles/trip hours/trip Beginning Members Attrition Ending Members New Members Avg # of Members Application fee (per new member) Annual fees (per avg member) Per mile charge Per hour charge Security Deposits (avg. balance) Interest income (on avg. sec. dep. balance) Total Revenue Costs Variable Costs / Car Beginning Cars Ending Cars Avg # of Cars Lease Cost (car/year) Access equip, (car/year) 4 22 4 0.05 25 300 0.4 1.5 300 4% 4,000 400 0 0 440 440 220 440 22 856 438 648 11,000 66,000 92,928 63,360 66,000 2,640 235,928 0 24 12 48,000 4,800 856 42.8 908 94.8 882 908 45.4 1180 317.4 1,044 1180 59 1196 75 1,188 10,950 194,400 273,715 186,624 194,400 7,776 673,465 2,370 7,935 264,600 313,200 372,557 440,986 254,016 300,672 264,600 313,200 10,584 12,528 904,127 1,075,321 1,875 356,400 501,811 342,144 356,400 14,256 1,216,486 24 48 36 144,000 14,400 48 50 49 196,000 19,600 50 66 58 232,000 23,200 66 66 66 264,000 26,400 Fuel (car/year) Insurance (car/year) Maintenance (car/year) Parking (car/year) Total Variable Costs 12,960 20,400 4,800 0 90,960 38,880 61,200 14,400 0 272,880 52,920 83,300 19,600 0 371,420 62,640 98,600 23,200 0 439,640 71,280 112,200 26,400 0 500,280 800 2,895 100,000 20,000 0 1,000 1,200 125,895 800 3,160 100,000 20,000 0 1,000 1,800 126,760 800 12,000 100,000 20,000 5,000 1,000 1,800 140,600 800 6,000 100,000 20,000 5,000 1,000 1,800 134,600 800 7,000 100,000 20,000 5,000 1,000 2,500 136,300 5,280 24,000 4,800 0 1000 1,200 10,000 8,800 55,080 15,552 24,000 24,780 0 1000 1,800 12,000 8,760 87,892 21,168 24,000 24,780 5,000 1000 1,800 12,000 1,896 91,644 25,056 24,000 24,780 5,000 1000 1,800 12,000 6,348 99,984 28,512 24,000 24,780 5,000 1000 2,500 12,000 1,500 99,292 Total Overhead Costs 180,975 214,652 232,244 234,584 235,592 Net Income Before Tax -36,007 185,933 300,463 401,097 480,614 Fixed costs - Corp. level Corporate insurance Reservation system Administration - Corp. Benefits Office Space Office equip. & supplies Phone Total Corp. Overhead Fixed costs - Boston Office Billing (member/year) Administration - local Benefits Office space Office equip. & supply Telephone and Datalines Marketing Background checks (per new member) Total Boston Overhead 1,080 1,700 400 0 20% 24 20% 20 Source: Company. Exhibit 5 Revised Financial Plan for Boston, May 2000 Assumption (per unit) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Revenues Trips/member/month 4 miles/trip 22 hours/trip 4 Beginning Members 0 440 856 908 1180 0 440 66 856 128.4 908 136.2 1180 177 1196 New Members 440 482 180.4 408.2 193 Avg # of Members 220 648 882 1,044 1,188 Attrition Ending Members Application fee (per new member) Annual fees (per avg member) Per mile charge Per hour charge Security Deposits (avg. balance) Interest income (on avg. sec. dep. balance) Total Revenue 0.15 25 75 0.4 5.5 300 4% 11,000 12,050 4,510 10,205 4,825 16,500 48,600 66,150 78,300 89,100 92,928 273,715 372,557 440,986 501,811 232,320 684,288 931,392 1,102,464 1,254,528 66,000 194,400 264,600 313,200 356,400 2,640 7,776 10,584 12,528 14,256 355,388 1,026,429 1,385,193 1,644,483 1,864,520 Costs Variable Costs / Car Beginning Cars 0 24 48 50 66 Ending Cars 24 48 50 66 66 Avg # of Cars 12 36 49 58 66 Lease Cost (car/year) Access equip, (car/year) Fuel (car/year) Insurance (car/year) Maintenance (car/year) Parking (car/year) Total Variable Costs 4,400 500 1,080 1,700 400 600 52,800 6,000 12,960 20,400 4,800 7,200 104,160 158,400 18,000 38,880 61,200 14,400 21,600 312,480 215,600 24,500 52,920 83,300 19,600 29,400 425,320 255,200 29,000 62,640 98,600 23,200 34,800 503,440 290,400 33,000 71,280 112,200 26,400 39,600 572,880 800 800 800 800 800 2,895 3,160 12,000 6,000 7,000 100,000 100,000 100,000 100,000 100,000 20,000 0 20,000 0 20,000 5,000 20,000 5,000 20,000 5,000 Office equip. & supplies 1,000 1,000 1,000 1,000 1,000 Phone 1,200 1,800 1,800 1,800 2,500 125,895 126,760 140,600 134,600 136,300 24 5,280 24,000 15,552 24,000 21,168 24,000 25,056 24,000 28,512 24,000 20% 4,800 0 24,780 0 24,780 5,000 24,780 5,000 24,780 5,000 Office equip. & supply 1000 1000 1000 1000 1000 Telephone and Datalines 1,200 1,800 1,800 1,800 2,500 10,000 12,000 12,000 12,000 12,000 Fixed costs - Corp. level Corporate insurance Reservation system Administration - Corp. Benefits Office Space 20% Total Corp. Overhead Fixed costs - Boston Office Billing (member/year) Administration - local Benefits Office space Marketing Background checks (per new member) Total Boston Overhead 8,800 55,080 9,640 88,772 3,608 93,356 8,164 101,800 3,860 101,652 Total Overhead Costs 180,975 215,532 233,956 236,400 237,952 Net Income Before Tax 70,253 498,417 725,917 904,643 1,053,688 Source: Company. 20 Exhibit 8a Zipcar Membership Data, 2000 New Members Beta June July August September Source: Company. 14 20 49 64 101 Attrition 0 0 3 3 3 Ending Members 14 34 80 141 239 Exhibit 8b September Operating Data Note: Zipcar offered a daily rate of $44 for 24 hours, which included 125 free miles. In the table below, these uses, as well as the hours and miles associated with them, are broken out and described as "daily" uses. The other uses - and their miles, hours and revenues - are described as "hourly" uses. Overhead Expenses Boston Corporate 14,000.00 30,000.00 Applications & Membership Beginning members Applications Applications Approved New members Attrition Ending Members Total "member days"a Application Fees Annual Member Fees received Annual Member Fees "booked"b 141.00 112.00 105.00 101.00 3.00 239.00 5,088.00 2,800.00 7,575.00 1,512.00 Deposits Deposits received in September 42,300.00 Total deposit balance month end 71,700.00 Average deposit balance Interest earned on total deposits 42,090.00 155.00 Usage Available "car days"a Total trips taken (uses) hourly uses daily uses Total miles driven miles driven - hourly uses miles driven - daily uses Total hours used hours used - hourly uses hours used - daily uses Trips - night & wekend %c Hours of use - night and weekend %c 439.00 335.00 218.00 117.00 16,339.00 5,341.00 10,998.00 3,223.00 1,351.00 1,872.00 60.00% 53.00% Revenues Total miles billed miles billed - hourly uses miles billed - daily uses 5,765.00 5,341.00 424.00 Total hours billed hours billed - hourly uses hours billed - daily uses Total mileage revenue mileage revenue - hourly uses mileage revenue - daily uses Total hourly revenue hourly revenue - hourly uses hourly revenue - daily uses Total usage revenue revenue from daily uses revenue from hourly uses 2,287.00 1,351.00 936.00 2,276.00 2,106.40 169.60 12,368.50 7,220.50 5,148.00 14,644.50 5,317.60 9,326.90 Source: Company. Member days = the total number of members on any given day for each of the 30 days of the month, e.g., a member for a full month generates 30 member days. Similarly, a car day is one day of one car being in service. a While Zipcar members paid a $75 annual membership fee upon joining, only 1/12 of that fee was "booked" to revenue each month. b Night and weekend = 6 p.m. to 8 a.m. and all day Saturday and Sunday. c
