Dashboard Logistics Inc. (DLI) Case Study ACCT 2301 Fall 2022 Dashboard Logistics Inc. (DLI) is looking to revolutionize the supply chain market by reducing the complexities that smaller rms experience in the supply chain process. Typically, \"start-up\" firms have to hire their own team for this process, or hire consultants, which can add up to a large item in the start-up's budget. Start-ups today have to spend weeks researching multiple companies to nd every aspect of their supply chain: freight, storage, quality control, and getting to the end customer. Many companies will not know their exact price for all of this until orders are actually sent out. DLI, a Northeastern University lDEA venture, has taken the hassle out of this process by nding all this information for a start-up based upon DLI's creation of a beta version of an online calculator (using proprietary algorithms) and an associated web-based dashboard. Companies will be able to find all of this information in one place and be able to know their supply chain costs beforehand. Start-ups will then be able to manage their costs and cycle times more efciently. Currently, DLI gains customers through direct sales. They estimate it takes approximately 16 hours of sales effort and the associated time to \"on boar \" a customer. DLI is targeting a narrow niche of customers characterized as having pro-packaged physical products that require no additional preparation. They plan to attract customers who want to know exactly when and what they are going to pay. DLI plans to grow with these customers handling their fulllment as the customer expands. As DLI grows, it will then plan to take on medium sized companies who want to upgrade their supply chain process. There are approximately 8,000 startups in the US today in which DLI can target. Based on the company's calculations, this is approximately $30 million in potential revenue. Secondary research indicates that the average startup company starts by shipping 3,000 ordersfmonth and grows to 5,000 ordersfmonth after one year. DLI has three main competitors, Boatline which has their services online, but requires customers to know both the location of their warehouse and how best to ship their products to the warehouse. Choosing a warehouse can be one of the most costly factors in logistics. S- Commerce includes the entire logistics process, but focuses mainly on e-commerce. Their third customer, Jungle, prefers only large customers. It is November and DLI is seeking a $10,000 grant from IDEA's Funding Board to help grow their company. DLI plans to use part of the funds to hire a designer to improve the user experience. The improved user experience on the website will facilitate the process of gaining customers. Currently, \"on-boarding\" customers takes a longer time because it is necessary to walk customers through their dashboard. With less time spent on this process, DLI can focus its time on gaining more customers. They also plan to use some of the funds to hire a programmer to develop a sales tool to help DLI reach thousands of businesses that go through company incubators and venture capital rms. DLI also plans to use some of its sales efforts to start strategic partnerships with company incubators to become preferred vendors and be able to reach more startups. Ideally, DLI plans to be relevant to physical product companies at every stage of the supply chain. After DLI has built up their user interface and has on-boarded 10 paying customers, they plan to target popular newspapers, magazines and social media platforms to write content about the innovative nature of DLI's business model. As part of the funding process, DLI has developed projected sales and expense forecasts, with and withOut funding. These are displayed in Tables 1 and 2. As part of the stage gate process, DLI has a meeting with the IDEA Board relative to their funding request, strategy and projected business plan. In preparation for the meeting, the DLI team largely current or recently graduated software engineer majors at Northeastern University has asked for your help. As a student in DMSB and someone who has successfully completed the managerial accounting course, they know that you can help them prepare for their meeting. You think that this is a great opportunity for you to put your managerial accounting skills to work in an advisory role for these entrepreneurs. Knowing the power of managerial accounting data, you anticipate the following questions to be asked. You should prepare cogent answers to these questions, draw relevant insights and provide any supporting exhibits andfor visualizations that you believe will illuminate your analysis. You should use Excel for your analyses. In your advisory role, you need to prepare DLI to pitch their idea for funding. REQUIRED QUESTIONS 1. Describe the industry and the competitors in which DLI is entering. Discuss DLI's strategy to compete in this market. 2. In what specic ways nancially would the grant funding help DLI? How would this be expressed quantitatively? What further questions might you want to ask of this venture (and is there any other types of data that you think would be useful?) 3. Classify the costs by behavior using number of transactions (customer orders) as the activity. Be sure to provide both quantitative and qualitative support when applicable. Does there seem to be an opportunity to substitute xed for variable costs (or vice versa)? 4. Prepare a contribution margin income statement by month with and without the funding. Comment on DLI's cost structure. 5. Calculate DLI's breakeven point. How does breakeven with and without the grant nancing compare? Show your calculations in detail and provide any assumptions and/or approaches that you took to frame an answer to this potential question posed by the Board. Assume grant funding for these questions 6. Which forecasts will the Board be most concerned about accuracy and/or not meeting the projections? Why? How should DLI respond to alleviate some of the Board's concerns? '1 Prepare a sensitivity analysis (+f- 10%) around the average transactions per customer for the Q1 forecasts (present as a contribution margin income statement). What can you conclude from the sensitivity analysis? Table 1 DASHBOARD LOGISTICS INC (DLI) Sales Data January February March April May June July August September October November December Sales Forecast Sales Pipeline without Funding Qualified Customers (Companies) 112 246 400 800 1200 1600 2000 2400 2800 3200 3600 4000 Interested Customers 40 60 120 240 360 480 600 720 840 960 1080 1200 Quoted Customers 5 10 16 32 48 64 80 96 112 128 144 160 Paying Customers 1 1 2 4 6 8 10 12 14 16 18 20 Sales Pipeline with Funding Qualified Customers (Companies) 112 246 1000 1400 1800 2200 2600 3000 3400 3800 4200 4600 Interested Customers 40 60 300 420 540 660 780 900 1020 1140 1260 1380 Quoted Customers 5 10 40 56 72 88 104 120 136 152 168 184 Paying Customers 1 1 5 7 9 11 13 15 17 19 21 23 Monthly Revenue # Customers 1 1 5 7 9 11 13 15 17 19 21 23 Avg Transactions per Customer 1103 1500 2000 2500 3000 3300 3500 4000 4500 4700 4800 5000 Avg Selling Price per Transaction $0.10 $0.50 $0.75 $0.85 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 Total Monthly Revenue $110 $750 $7,500 $14,875 $27,000 $36,300 $45,500 $60,000 $76,500 $89,300 $100,800 $115,000 *Transactions are orders placed by each customer with DLI.Table 2 DASHBOARD LOGISTICS INC (DLI) Pro Forma Profit and Loss January February March April May June July August September October November December Total Sales $110 $750 $7,500 $14,875 $27,000 $36,300 $45,500 $60,000 $76,500 $89,300 $100,800 $115,000 $573,635 Operating Expenses Executive, Sales, & Misc. Expenses Executive Payroll $2,000 $2,000 $2,000 $4,000 $6,000 $8,000 $8,000 $10,000 $12,000 $12,000 $12,000 $5,000 $83,000 Engineers SO SO SO SO $0 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000 $55,000 Marketing SO SO $o $0 $0 $0 $6,000 $6,000 $6,000 $6,000 $24,000 Sales Exp $110 $150 $1,000 $1,750 $2,700 $3,630 $4,550 $6,000 $7,650 $8,930 $10,080 $11,500 $58,050 Servers/Hosting $18 $20 $45 $68 $96 $124 $152 $195 $245 $283 $317 $360 $1,922 Travel Expenses $0 SO $500 $500 $500 $500 $500 $500 $1,500 $1,500 $1,500 $1,500 $9,000 Total Executive Expenses $2,129 $2,170 $3,545 $6,318 $9,296 $12,254 $18,202 $26,695 $37,395 $38,713 $39,897 $34,360 $230,972 Accounting & Legal Expenses Accounting & Legal Payroll SO SO $O $200 So $o $200 So So $200 SO So $600 Rent $2,200 $2,200 $2,200 $4,000 $4,000 $4,000 $4,000 $4,000 $7,500 $7,500 $7,500 $9,000 $58,100 Total Accounting & Legal Expenses $2,200 $2,200 $2,200 $4,200 $4,000 $4,000 $4,200 $4,000 $7,500 $7,700 $7,500 $9,000 $58,700 Total Operating Expenses $4,329 $4,370 $5,745 $10,518 $13,296 $16,254 $22,402 $30,695 $44,895 $46,413 $47,397 $43,360 $289,672 Profit Before Interest and Taxes ($4,218) ($3,620) $1,755 $4,358 $13,704 $20,046 $23,099 $29,305 $31,606 $42,887 $53,403 $71,640 $283,963