cost volume profit analysis for a proposed store front.

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Appendix Three (Cost-Volume-Profit Analysis for a proposed storefront) Objective: In order to maximize revenue, the consulting group would like to analyze the feasibility of opening a storefront in an area with significant traffic. The store would focus on selling high value meals. Scenario: Cost card of meals to be sold at the store Item Revenue Variable expense Contribution Margin Per unit $30 15 $15 Fixed expenses per month Storefront rental Equipment depreciation Selling Administrative expenses Total 90,000 7,000 20,000 18,000 135,000 The store is projected to generate a net operating income of $ 125,000, after taxes. The applicable tax rate is 20%. Methodology: The group would analyze the sales volume required to reach the target net operating income. Based on this sales figure, they would also like to iterate the staffing pattern and further analyze the impact on net operating income. The iteration would include, adding another two part time salespersons. As a result, the selling expenses will increase by $ 36,000 and will bring in an additional $ 60,000 in revenue. They would prepare a Contribution margin income statement and calculate the degree of operating leverage. Appendix Three (Cost-Volume-Profit Analysis for a proposed storefront) Objective: In order to maximize revenue, the consulting group would like to analyze the feasibility of opening a storefront in an area with significant traffic. The store would focus on selling high value meals. Scenario: Cost card of meals to be sold at the store Item Revenue Variable expense Contribution Margin Per unit $30 15 $15 Fixed expenses per month Storefront rental Equipment depreciation Selling Administrative expenses Total 90,000 7,000 20,000 18,000 135,000 The store is projected to generate a net operating income of $ 125,000, after taxes. The applicable tax rate is 20%. Methodology: The group would analyze the sales volume required to reach the target net operating income. Based on this sales figure, they would also like to iterate the staffing pattern and further analyze the impact on net operating income. The iteration would include, adding another two part time salespersons. As a result, the selling expenses will increase by $ 36,000 and will bring in an additional $ 60,000 in revenue. They would prepare a Contribution margin income statement and calculate the degree of operating leverage