Net x INC x A SAMPLE OF WORKING PAPER FO X Meet - nno-jheg-fuz pogle.com/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 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 Network gaming stations in the area operate from AM to 12AM. days a week. However, Villavicer found out that the peak hours are illed to 100 capacity only from 4 to 9PM where the 0.00. Bascu un Villavicer's market 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 some 3. Daily operations of a 20 PC network gaming business will | require six employees, two supervisors and Tour staff crews, who will work on two eight hour shitis. The supervisors will get a lixed monthly salary of Pg. 500 while the stall crews will receive the daily minimum wage rate of P270: The stall crews are entitled to overtime premiums ol 35% alter then wirst 8 hours of work Villavicer estimates employee fringe behet ils lu be total gross compensation. Furthermore, the labor code legures that each employee receive one day of rest per day neck W CHAPTER 9 blasst NETNING 4 Utly expenses are for electricity, telephone and water. Villavicer roughly estimates electricity cost at P60.00 per hour of operation Prejected monthly telephone and water expenses are P1 500 and respectively EXHIBIT 1 DETAILS OF CAPITAL EXPENDITURE Estimated Useful Life 3 years. P650.000 Computers and Networking Hardware 2 years 5 vears Svears asthold improvements CABE NETINC. GUIDE QUESTIONS Both being novice businessmen, Villavicer and Aguinaldo asked for your help to analyze the financial data they have accumulated. Based on the gunde 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 astrate per hour and monthly fixed cost b. Compute for the Company's breakeven price rate. (Round oil te the nearest CERNO Will the business be profitable at the P20,00 pree me & What pnce rate should be established in onder le teach the minimum net income level that will enunce thavand Aguinaldo to resign fiam their entrer to work full ume in Ner X7 Rama the near Net x INC x A SAMPLE OF WORKING PAPER FO X Meet - nno-jheg-fuz pogle.com/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 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 Network gaming stations in the area operate from AM to 12AM. days a week. However, Villavicer found out that the peak hours are illed to 100 capacity only from 4 to 9PM where the 0.00. Bascu un Villavicer's market 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 some 3. Daily operations of a 20 PC network gaming business will | require six employees, two supervisors and Tour staff crews, who will work on two eight hour shitis. The supervisors will get a lixed monthly salary of Pg. 500 while the stall crews will receive the daily minimum wage rate of P270: The stall crews are entitled to overtime premiums ol 35% alter then wirst 8 hours of work Villavicer estimates employee fringe behet ils lu be total gross compensation. Furthermore, the labor code legures that each employee receive one day of rest per day neck W CHAPTER 9 blasst NETNING 4 Utly expenses are for electricity, telephone and water. Villavicer roughly estimates electricity cost at P60.00 per hour of operation Prejected monthly telephone and water expenses are P1 500 and respectively EXHIBIT 1 DETAILS OF CAPITAL EXPENDITURE Estimated Useful Life 3 years. P650.000 Computers and Networking Hardware 2 years 5 vears Svears asthold improvements CABE NETINC. GUIDE QUESTIONS Both being novice businessmen, Villavicer and Aguinaldo asked for your help to analyze the financial data they have accumulated. Based on the gunde 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 astrate per hour and monthly fixed cost b. Compute for the Company's breakeven price rate. (Round oil te the nearest CERNO Will the business be profitable at the P20,00 pree me & What pnce rate should be established in onder le teach the minimum net income level that will enunce thavand Aguinaldo to resign fiam their entrer to work full ume in Ner X7 Rama the near