Norcross Carpet Cleaning (NCC) is a commercial service specializing in maintaining foor coverings in hightratfic areas sach as malls and office beildings. The business is highly seasonal, with high denand in the winter and low demand in the summer. In both seasons. the demand depends on the weather, amoong other factors. Managers at the company are working on the badget for the following winter selson to determine personacl and funding needs. Based on expertise, experience, and regional economc forecasts, they develop the foltowing: For simplicity, the managers assune that the gross inargin and the estinated number of customers are independent. Thus, there are nine possible scenarips. In addition to the cost of the cleaning (incloded in the gross margin estimates), the manapers estimate stating costs to be $35,000 plus $120 for every client in excess of 1,000 . The marketing and adatinistrative costs are estimated to be $20,000 plus 4 percent of the gross margin Resuimul a. Use a spreadsheet to prepare an analysis of the possible operating income for Norcross Carpet Cleaning similar to that in (5) Exlibit 13,16. What is the tange of operating incomes? b. The managers at Norcross wonld like to be able to visualize these results, to present to the board. Create a graph that illastrates the effect of the number of clients on operating profit for each possible value of gross margin per client c. What conclusions about the most faworable scenarios for Norcross do these visualizations sagest? Prepare a short memo that will help the board members understand these conclusions. Norcross Carpet Cleaning (NCC) is a commercial service specializing in maintaining foor coverings in hightratfic areas sach as malls and office beildings. The business is highly seasonal, with high denand in the winter and low demand in the summer. In both seasons. the demand depends on the weather, amoong other factors. Managers at the company are working on the badget for the following winter selson to determine personacl and funding needs. Based on expertise, experience, and regional economc forecasts, they develop the foltowing: For simplicity, the managers assune that the gross inargin and the estinated number of customers are independent. Thus, there are nine possible scenarips. In addition to the cost of the cleaning (incloded in the gross margin estimates), the manapers estimate stating costs to be $35,000 plus $120 for every client in excess of 1,000 . The marketing and adatinistrative costs are estimated to be $20,000 plus 4 percent of the gross margin Resuimul a. Use a spreadsheet to prepare an analysis of the possible operating income for Norcross Carpet Cleaning similar to that in (5) Exlibit 13,16. What is the tange of operating incomes? b. The managers at Norcross wonld like to be able to visualize these results, to present to the board. Create a graph that illastrates the effect of the number of clients on operating profit for each possible value of gross margin per client c. What conclusions about the most faworable scenarios for Norcross do these visualizations sagest? Prepare a short memo that will help the board members understand these conclusions
