Net x INC SAMPLE OF WORKING PAPER FOX Meet - nno-jheg-fuz /u/1/c/MTI5NTg3OTAOMDc1/m/MTQwMjY5NTgxMjA0/details Villavicer had found a suitable location in the vicinity of Muntinlupa A 2-floor commercial apartment space was available for a monthly rent of P10,500. The main attraction of the location was its closecimity to several schools, offices and residential areas that made it acame to their target dientele. The space can conveniently accommodate 20 to 30 PC units. Based on Villavicer's preliminary study, initial capital expenditure is estimated around P750,000 (Exhibit 1). Aguinaldo will contribute 65% of the capital expenditure, and thus, will receive 65% of the net income. The details of Villavicer's study are presented as follows: Network gaming stations charge customers based on hourly use of the computers. Competitors within the area charge as low as P15.00 (per hour per PC) to as high as Podo. Based on Villavicer's market study, their market is only willing to spend P20 to 25 an hour for network gaming Network gaming stations in the area operate from 9AM 10 12AM days a week. However. Villavicer found out that the peak hours are only from 4 PM where the stations are hitled to lose the average ratis only Crowd THE PROJECT VENTURE Villavicer had found a suitable location in the vicinity of Muntinlupa. A 2-floor commercial apartment space was available for a monthly rent of P10,500. The main attraction of the location was its close proximity to several schools, offices and residential areas that made it accessible to their target clientele. The space can conveniently accommodate 20 to 30 PC units. Based on Villavicer's preliminary study, initial capital expenditure is estimated around P750,000 (Exhibit 1). Aguinaldo will contribute 65% of the capital expenditure, and thus, will receive 65% of the net income. The details of Villavicer's study are presented as follows: 1. Network gaming stations charge customers based on hourly use of the computers. Competitors within the area charge as low as P15.00 (per hour per PC) to as high as P40.00. Based on Villavicer's market study, their market is only willing to spend P20 to P25 an hour for network gaming W X P study, their market is only willing to spend P20 to P25 an hour for network gaming 2. Network gaming stations in the area operate from 9AM to 12AM, 7 days a week. However, Villavicer found out that the peak hours are only from 4 to 9PM where the stations are filled to 100% capacity. During off-peak hours, the average usage rate is only 50%. 3. Daily operations of a 20-PC network gaming business will require six employees, two supervisors and four staff crews, who will work on two eight-hour shifts.hthe supervisors will get a fixed monthly salary of P8,500 while the staff crews will receive the daily minimum wage rate of P270. The staff crews are entitled to overtime premiums of 25% after their first 8 hours of work. Villavicer estimates employee fringe benefits to be 10 of gress compensation. Furthermore, the labor code requires that each employee receive one day of rest pet ) dan wecki W CHAPTER 3 I CANET NET XING 4 Utility expenses are for electricity, telephone and water. Villavicer roughly estimates electricity cost at P60.00 per hour of operation. Projected monthly telephone and water expenses are P1,500 and P400.00, respectively. EXHIBIT 1 DETAILS OF CAPITAL EXPENDITURE Expenditure Item Estimated Useful Life Amount 20 Personal Computers and Networking Hardware 3 years 2 years Nate Do GUIDE QUESTIONS Both being novice businessmen. Villavicer and Aguinaldo asked for your help to analyze the financial data they have accumulated. Based on the guide questions below, what will be your recommendation to the founders of Net X. Inc? (Note: Assume 30 days in one month.) a Compute for the variable cost rate per hour and monthly fixed cost b. Compute for the Company's breakeven price rate. (Round off to the nearest centavo) Will the business be profitable at the P20,000 price rate? What price rate should be established in order to reach the minimum net income level that will convince Villavice and Aguinaldo to resign from their poetien la work full time in NeX7 Reundethe nearest Net x INC SAMPLE OF WORKING PAPER FOX Meet - nno-jheg-fuz /u/1/c/MTI5NTg3OTAOMDc1/m/MTQwMjY5NTgxMjA0/details Villavicer had found a suitable location in the vicinity of Muntinlupa A 2-floor commercial apartment space was available for a monthly rent of P10,500. The main attraction of the location was its closecimity to several schools, offices and residential areas that made it acame to their target dientele. The space can conveniently accommodate 20 to 30 PC units. Based on Villavicer's preliminary study, initial capital expenditure is estimated around P750,000 (Exhibit 1). Aguinaldo will contribute 65% of the capital expenditure, and thus, will receive 65% of the net income. The details of Villavicer's study are presented as follows: Network gaming stations charge customers based on hourly use of the computers. Competitors within the area charge as low as P15.00 (per hour per PC) to as high as Podo. Based on Villavicer's market study, their market is only willing to spend P20 to 25 an hour for network gaming Network gaming stations in the area operate from 9AM 10 12AM days a week. However. Villavicer found out that the peak hours are only from 4 PM where the stations are hitled to lose the average ratis only Crowd THE PROJECT VENTURE Villavicer had found a suitable location in the vicinity of Muntinlupa. A 2-floor commercial apartment space was available for a monthly rent of P10,500. The main attraction of the location was its close proximity to several schools, offices and residential areas that made it accessible to their target clientele. The space can conveniently accommodate 20 to 30 PC units. Based on Villavicer's preliminary study, initial capital expenditure is estimated around P750,000 (Exhibit 1). Aguinaldo will contribute 65% of the capital expenditure, and thus, will receive 65% of the net income. The details of Villavicer's study are presented as follows: 1. Network gaming stations charge customers based on hourly use of the computers. Competitors within the area charge as low as P15.00 (per hour per PC) to as high as P40.00. Based on Villavicer's market study, their market is only willing to spend P20 to P25 an hour for network gaming W X P study, their market is only willing to spend P20 to P25 an hour for network gaming 2. Network gaming stations in the area operate from 9AM to 12AM, 7 days a week. However, Villavicer found out that the peak hours are only from 4 to 9PM where the stations are filled to 100% capacity. During off-peak hours, the average usage rate is only 50%. 3. Daily operations of a 20-PC network gaming business will require six employees, two supervisors and four staff crews, who will work on two eight-hour shifts.hthe supervisors will get a fixed monthly salary of P8,500 while the staff crews will receive the daily minimum wage rate of P270. The staff crews are entitled to overtime premiums of 25% after their first 8 hours of work. Villavicer estimates employee fringe benefits to be 10 of gress compensation. Furthermore, the labor code requires that each employee receive one day of rest pet ) dan wecki W CHAPTER 3 I CANET NET XING 4 Utility expenses are for electricity, telephone and water. Villavicer roughly estimates electricity cost at P60.00 per hour of operation. Projected monthly telephone and water expenses are P1,500 and P400.00, respectively. EXHIBIT 1 DETAILS OF CAPITAL EXPENDITURE Expenditure Item Estimated Useful Life Amount 20 Personal Computers and Networking Hardware 3 years 2 years Nate Do GUIDE QUESTIONS Both being novice businessmen. Villavicer and Aguinaldo asked for your help to analyze the financial data they have accumulated. Based on the guide questions below, what will be your recommendation to the founders of Net X. Inc? (Note: Assume 30 days in one month.) a Compute for the variable cost rate per hour and monthly fixed cost b. Compute for the Company's breakeven price rate. (Round off to the nearest centavo) Will the business be profitable at the P20,000 price rate? What price rate should be established in order to reach the minimum net income level that will convince Villavice and Aguinaldo to resign from their poetien la work full time in NeX7 Reundethe nearest