Question
EXHIBIT 1: YALLA MOMOS INCOME STATEMENT FOR THE YEAR ENDING 2015 (IN AED) Net Revenue 504,000 Expenses Cost of food sales 151,200 Rent 68,000 Salaries
EXHIBIT 1: YALLA MOMOS INCOME STATEMENT FOR THE YEAR ENDING 2015 (IN AED) | |||
Net Revenue | 504,000 | ||
Expenses | |||
Cost of food sales | 151,200 | ||
Rent | 68,000 | ||
Salaries | 54,000 | ||
Administrative costs | 23,000 | ||
Depreciation | 30,200 | ||
Utilities | 13,000 | ||
Miscellaneous expenses | 15,800 | ||
Advertising costs | 0 | ||
Interest | 13,000 | ||
Net Profit | 135,800 |
EXHIBIT 2: YALLA MOMOS PROJECTIONS FOR THE YEAR 2016 (IN AED) | ||
Without expansion | With expansion | |
Rent | 75,000 | 88,000 |
Salaries | 61,400 | 75,000 |
Administrative costs | 26,000 | 34,000 |
Depreciation | 34,720 | 38,360 |
Utilities | 14,000 | 19,000 |
Miscellaneous expenses | 17,060 | 19,180 |
Advertising costs | 8,000 | 12,000 |
Interest | 13,000 | 16,000 |
Source: Company documents, Ivey publications
Required:
- Elaborate on the relevant factors that need to be considered when deciding to expand. (200 words)
- How can companies like Yalla Momos benefit from CVP analysis? Calculate the 2015 BEP and Margin of safety (MOS) in quantity and monetary terms. (150 words)
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