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Posted on Jul 28, 2024

(PLEASE TYPE THE ANSWERS) (ACCOUNTING 640) 1. Explain how owning and running a food truck might impact your sales and costs (Explain both variable and

(PLEASE TYPE THE ANSWERS) (ACCOUNTING 640)

1. Explain how owning and running a food truck might impact your sales and costs (Explain both variable and fixed costs).

2. On a typical day in Kamloops, how many Ripped Pig sandwiches must be sold in order to break even? Calculate and explain why this number and breakeven concept should be relevant to the entrepreneurs.

3. If Cat and Joe wish to make a $100,000 profit for the year (after tax), how many pulled pork sandwiches must the Pig Rig sell each day? Assume all days are in Kamloops at regular prices. The profit before taxes is 125,000, use this in the formula.

4. Prepare three contribution-format income statements for one days business at the Pig Rig based on 4a) optimistic, 4b) realistic, and 4c) pessimistic projections for a regular, non-event day in Kamloops. Briefly explain and compare each of them.

5. Prepare three contribution-format income statements for the Bullarama event based on: 5a) an optimistic projection (no onsite competitors), 5b) a conservative projection (one onsite competitor), and 5c) a pessimistic projection (two onsite competitors). Explain and compare each of them.

6. Explain several non-financial advantages and disadvantages of attending the Bullarama event.

7. Cat and Joes Pig Rig operates for 180 days each year. 7a) Explain several pros and several cons of operating for 180 days. 7b) Compare/contrast the major advantages and disadvantages of operating for 180 days vs. a full year 365 days. 7c) Which would you recommend and why?

8. Assume instead of one product (the Ripped Pig sandwich), Cat & Joes Pig Rig served three items: 1. the Ripped Pig sandwich, which sells for $12 and had variable costs of 40% of sales price; 2. the Pork Taco, which sells for $9 and had variable costs of 35%; and 3. the Mac and Cheese Pulled Pork, which sells for $12 and had variable costs of 50%. Fixed costs were expected to remain at $10,000 per year (180 operational days) and income taxes were expected to be 20%. On a typical day, Cat and Joe would serve a total of 125 customers. The sales mix is as follows: 25 customers would order Mac and Cheese Pulled Pork, 25 would order Pork Tacos, and 75 would order the Ripped Pig sandwich.

8a) Complete an analysis showing the financial results for the above scenario. (Layout the revenue, variable cost and contribution margin for each item).

8b) Assuming the same sales mix as described above, if the entrepreneurs wish to earn a target profit of $100,000 after tax ($125,000 before tax), how many units of each item must be sold? (hint: calculate a per unit contribution analysis for each item and then an average contribution margin will need to be calculated, which is done by multiplying each of the CMs by the sales mix percentage).

PLEASE TYPE THE ANSWERS) (ACCOUNTING 640)

1. Explain how owning and running a food truck might impact your sales and costs

6. Explain several non-financial advantages and disadvantages of attending the Bullarama event.

8a) Complete an analysis showing the financial results for the above scenario. (Layout the revenue, variable cost and contribution margin for each item).

URLU uni uyung AyLU U UPPFLUMILY. Search similar left the 'yes' to CAT AND JOE % en weral southern- ilosophy tish een and doing Cat and Joe came from the neighbouring towns of Smithers and Houston in northern British Columbia. They knew each other growing up but never connected beyond the level of acquaintances. Cat recalled their relationship as teens: "I was interested in Joe, and Joe was interested in hockey." The two lost touch, married other people, and started their own families. Cat had one daughter and two sons, while Joe had two sons of his own. Cat went to school for nursing and referred to her career as that of a "gypsy nurse" working for a wide variety of organizations. Her most recent jobs included a role at a pregnancy Outreach center and an instructional post in the nursing program at the local university in Kamloops. Joe's career had been more stable. After a short time as a cook in a restaurant, he found a permanent career behind the wheel of a logging truck, first in northern British Columbia then moving to the city of Merritt, 100 kilometers south of Kamloops. Cat and Joe's marriages dissolved. Eventually, the newly single acquaintances reconnected on Facebook when the social media site suggested that they might know each other. M I le Re their in the of aper: ted, Cat rodeo 0 Pro thern- Conve with cvent ended Desktop 100 Indi: Crep truck local Joe's They busin THE learn that one of Joe's hobbies was smoking meat. After high school, as soon as Joe could afford a smoker, he bought one, and in the two decades since, he had become an expert in the art of smoking and slow-cooking beef and pork. He also enjoyed making his own rubs and sauces. As their relationship became more serious, Joe moved from Merritt to Kamloops to live with Cat. Joe's workplace was still based an hour away in Merritt, leaving him little time for family after the commute and his long days driving the logging truck. Neither Joe nor Cat was happy with this arrangement, with Joe spending a lot more time on the road than at home. Something had to give, so Joe began to look for new opportunities closer to Kamloops. It was at a potluck dinner that Cat and Joe got the inspiration for their business. Joe brought a dish from his smoker, and it was a hit. Two of their friends who attended the party, Cye Delaney and Denise Leigh, were owner- operators of a popular local tattoo parlour. These experienced entrepreneurs suggested that Joe's pork was so good that he and Cat had a legitimate business opportunity. They agreed to give Cat and Joe advice if needed and put the couple in touch with an angel investor When it came time to meet the potential investor, both 90 W Cat & month projec laurel only b the foc please would a loyal the eve Cand lac u s. Thesented the opportuni MI THE BUSINESS Search 'Bat Cat & Joe's Pig Rig saw immediate success. In the early months, the business outperformed its revenue and profit projections. But Cat and Joe did not wish to rest on their laurels. They knew that they were enjoying early success not only because they offered a good product but also because the food truck was a novelty in Kamloops. They were pleased to have a first-mover advantage, but they knew it would not last forever. They needed to continue to develop a loyal customer base and were also working hard to expand the event and private catering side of their business. The food truck's signature dish was its "Ripped Pig" pulled pork sandwich. The sandwich came in a combo with coleslaw, baked beans, and French fries and was priced at $12. The company had variable costs, which included the cost of the food, clamshell packaging, and variable overhead. Variable costs were 40% of the company's revenues. There was no labor cost as neither Joe nor Cat drew a wage or salary. 19 Expor Do Create Edit P Comm Combi El Organi Redact Protect Optimiz Fille si Search 'Bates B Export PDF . Create PDF Edit PDF nd Fixed costs included items such as gas for the generator, maintenance, business licenses, and truck depreciation. These costs totaled $10,000 per year. The operational year for the food druck was 180 days. Corporate income tax rates for small businesses in British Columbia were approximately 20% around that time. The pork needed to be put in the smoker at least 12 hours in advance of service, which created two challenges for Joe. First, it meant that he worked virtually 24 hours a day. Operating the truck meant setting up, serving, and cleaning up from 10 a.m. to 7 p.m. But when service was over, Joe's day was not done. He needed to smoke the pork overnight which involved putting the pork in the smoker late in the evening (with just the right blend of wood chips), and waking up to tend to the meat in two-hour intervals throughout the night, spraying the meat to ensure it would have the right consistency and tender quality when it was served the next day. Although it was exhausting work, Joe was willing; he had a great work ethic, he was his own boss, and smoking meat was one of his passions. Comment Combine Files ved El Organize Pages Redact fer Protect Optimize PDF Fill & Sign Help File Edit View Window Home Tools Comprehensive Ca... * A mea THE BU The second challenge presented by the 12-hour cooking requirement was determining how much pork to smoke_too much or too little could be a disaster. If Joe did not prepare enough meat the night before, he could not simply go out and buy more if they were having an unusually busy day. Failure to project high demand meant the Pig Rig would be sold out for the day, and Joe and Cat would need to close the truck early, leaving customers unsatisfied. If Joe prepared too much meat, and they didn't sell out the extra meat would be donated to a local soup kitchen. While Cat and Joe felt good about doing something generous in their community, donating pork meant inefficiency and significantly reduced their profits. Forecasting poorly was a huge risk for their business, and mistakes were costly. Fortunately, experience meant that Cat and Joe were getting better at predicting how many customers they could expect in a day. On a typical day, Cat and Joe served between 75 and 125 patrons, with an average of 100. The amount varied based on the weather, the day of the week, and other factors such as nearby local events. Joe also had a formula for when the truck was invited to special events: He expected 35% of attendees would purchase food, not necessarily from him, but from one of the food vendors at the event. He would use this ratio to estimate the number The invi Pig Rig British where nc compete riders co organize Whe they did They se French more qu also lett a much less exp $1.90 p The the Bul donatio and the to their 16 O 16% T THE BULLARAMA DILEMMA e en Search 'Bates Export PDF Bo Create PDF Edit PDF Comment Combine Files cooking noke too prepare go out y day. would be close the epared too I would be felt good ity, donating their profits. isiness, meant how many I day, Cat an average the day of ents. Joe to special rchase food, d vendors the number estimate El Organize Page The invitation was succinct. It explained that Cat & Joe's Pig Rig would be welcomed at Bullarama in Barriere, British Columbia. Bullarama was a charity rodeo event, where novice, junior, senior, and professional riders would compete. A handicapping system would be used to ensure all riders could expect competitive scores. According to event organizers, 700 tickets had been sold. When Joe and Cat brought their truck to special events they did not serve their usual pulled pork sandwich combo. They served only the sandwich, with no beans, coleslaw, or French fries. This enabled them to serve customers much more quickly and to reduce their price to $9 per serving. It also let them replace their expensive clamshell packaging with a much cheaper foil wrapping. With fewer side dishes and less expensive packaging, variable costs would be reduced by $1.90 per customer when compared to their normal menu. There were several other cost considerations related to the Bullarama event. First, the event organizers suggested a donation of $100. Second, their food truck ran on propane, and the 140 kilometer round trip to Barriere would add $100 to their typical fuel costs. Finally, in order to maximize space for the mobile cooking equipment, the truck only had one Redact Protect Optimize PDF 2. Fill & Sign Convert and edit! with Acrobat Pro Start Free Trial W Desktop - all c i O Sign U Sha ecial food, lors Search 'Bates ber Lo Export PDF Do Create PDF ate the cted Edit PDF Comment -cat Combine Files to mula TNICTC WCIC SEVCA ULTIC CUSC CUTISTUCILIUS CIC the Bullarama event. First, the event organizers suggested a donation of $100. Second, their food truck ran on propane, and the 140 kilometer round trip to Barriere would add $100 to their typical fuel costs. Finally, in order to maximize space for the mobile cooking equipment, the truck only had one seat (for the driver), so if Joe drove the food truck, Cat would need to drive her car separately, with an expected extra gas cost of $30. All of these costs would be avoided if they stayed home in Kamloops. The couple had one other concern. The organizers promised that Cat & Joe's Pig Rig would be the only food option available to event attendees, but the entrepreneurs had heard such promises before and found they were not always reliable. While they trusted the event organizers, they were worried about the potential for other onsite competitors. They planned to do calculations for multiple scenarios. The couple reminded themselves that business was good in Kamloops, but this represented an opportunity to expose their product to a new, potentially lucrative market. As Joe opened the calculator app on his smartphone, he reminded himself that numbers were important, but this decision would not be based on numbers alone. There were a lot of other factors to consider. El Organize Pages Redact ause oe O Protect em, Optimize PDF 2014, le Fill & Sign y had mod t the Convert and edit PC with Acrobat Pro Start Free Trial URLU uni uyung AyLU U UPPFLUMILY. Search similar left the 'yes' to CAT AND JOE % en weral southern- ilosophy tish een and doing Cat and Joe came from the neighbouring towns of Smithers and Houston in northern British Columbia. They knew each other growing up but never connected beyond the level of acquaintances. Cat recalled their relationship as teens: "I was interested in Joe, and Joe was interested in hockey." The two lost touch, married other people, and started their own families. Cat had one daughter and two sons, while Joe had two sons of his own. Cat went to school for nursing and referred to her career as that of a "gypsy nurse" working for a wide variety of organizations. Her most recent jobs included a role at a pregnancy Outreach center and an instructional post in the nursing program at the local university in Kamloops. Joe's career had been more stable. After a short time as a cook in a restaurant, he found a permanent career behind the wheel of a logging truck, first in northern British Columbia then moving to the city of Merritt, 100 kilometers south of Kamloops. Cat and Joe's marriages dissolved. Eventually, the newly single acquaintances reconnected on Facebook when the social media site suggested that they might know each other. M I le Re their in the of aper: ted, Cat rodeo 0 Pro thern- Conve with cvent ended Desktop 100 Indi: Crep truck local Joe's They busin THE learn that one of Joe's hobbies was smoking meat. After high school, as soon as Joe could afford a smoker, he bought one, and in the two decades since, he had become an expert in the art of smoking and slow-cooking beef and pork. He also enjoyed making his own rubs and sauces. As their relationship became more serious, Joe moved from Merritt to Kamloops to live with Cat. Joe's workplace was still based an hour away in Merritt, leaving him little time for family after the commute and his long days driving the logging truck. Neither Joe nor Cat was happy with this arrangement, with Joe spending a lot more time on the road than at home. Something had to give, so Joe began to look for new opportunities closer to Kamloops. It was at a potluck dinner that Cat and Joe got the inspiration for their business. Joe brought a dish from his smoker, and it was a hit. Two of their friends who attended the party, Cye Delaney and Denise Leigh, were owner- operators of a popular local tattoo parlour. These experienced entrepreneurs suggested that Joe's pork was so good that he and Cat had a legitimate business opportunity. They agreed to give Cat and Joe advice if needed and put the couple in touch with an angel investor When it came time to meet the potential investor, both 90 W Cat & month projec laurel only b the foc please would a loyal the eve Cand lac u s. Thesented the opportuni MI THE BUSINESS Search 'Bat Cat & Joe's Pig Rig saw immediate success. In the early months, the business outperformed its revenue and profit projections. But Cat and Joe did not wish to rest on their laurels. They knew that they were enjoying early success not only because they offered a good product but also because the food truck was a novelty in Kamloops. They were pleased to have a first-mover advantage, but they knew it would not last forever. They needed to continue to develop a loyal customer base and were also working hard to expand the event and private catering side of their business. The food truck's signature dish was its "Ripped Pig" pulled pork sandwich. The sandwich came in a combo with coleslaw, baked beans, and French fries and was priced at $12. The company had variable costs, which included the cost of the food, clamshell packaging, and variable overhead. Variable costs were 40% of the company's revenues. There was no labor cost as neither Joe nor Cat drew a wage or salary. 19 Expor Do Create Edit P Comm Combi El Organi Redact Protect Optimiz Fille si Search 'Bates B Export PDF . Create PDF Edit PDF nd Fixed costs included items such as gas for the generator, maintenance, business licenses, and truck depreciation. These costs totaled $10,000 per year. The operational year for the food druck was 180 days. Corporate income tax rates for small businesses in British Columbia were approximately 20% around that time. The pork needed to be put in the smoker at least 12 hours in advance of service, which created two challenges for Joe. First, it meant that he worked virtually 24 hours a day. Operating the truck meant setting up, serving, and cleaning up from 10 a.m. to 7 p.m. But when service was over, Joe's day was not done. He needed to smoke the pork overnight which involved putting the pork in the smoker late in the evening (with just the right blend of wood chips), and waking up to tend to the meat in two-hour intervals throughout the night, spraying the meat to ensure it would have the right consistency and tender quality when it was served the next day. Although it was exhausting work, Joe was willing; he had a great work ethic, he was his own boss, and smoking meat was one of his passions. Comment Combine Files ved El Organize Pages Redact fer Protect Optimize PDF Fill & Sign Help File Edit View Window Home Tools Comprehensive Ca... * A mea THE BU The second challenge presented by the 12-hour cooking requirement was determining how much pork to smoke_too much or too little could be a disaster. If Joe did not prepare enough meat the night before, he could not simply go out and buy more if they were having an unusually busy day. Failure to project high demand meant the Pig Rig would be sold out for the day, and Joe and Cat would need to close the truck early, leaving customers unsatisfied. If Joe prepared too much meat, and they didn't sell out the extra meat would be donated to a local soup kitchen. While Cat and Joe felt good about doing something generous in their community, donating pork meant inefficiency and significantly reduced their profits. Forecasting poorly was a huge risk for their business, and mistakes were costly. Fortunately, experience meant that Cat and Joe were getting better at predicting how many customers they could expect in a day. On a typical day, Cat and Joe served between 75 and 125 patrons, with an average of 100. The amount varied based on the weather, the day of the week, and other factors such as nearby local events. Joe also had a formula for when the truck was invited to special events: He expected 35% of attendees would purchase food, not necessarily from him, but from one of the food vendors at the event. He would use this ratio to estimate the number The invi Pig Rig British where nc compete riders co organize Whe they did They se French more qu also lett a much less exp $1.90 p The the Bul donatio and the to their 16 O 16% T THE BULLARAMA DILEMMA e en Search 'Bates Export PDF Bo Create PDF Edit PDF Comment Combine Files cooking noke too prepare go out y day. would be close the epared too I would be felt good ity, donating their profits. isiness, meant how many I day, Cat an average the day of ents. Joe to special rchase food, d vendors the number estimate El Organize Page The invitation was succinct. It explained that Cat & Joe's Pig Rig would be welcomed at Bullarama in Barriere, British Columbia. Bullarama was a charity rodeo event, where novice, junior, senior, and professional riders would compete. A handicapping system would be used to ensure all riders could expect competitive scores. According to event organizers, 700 tickets had been sold. When Joe and Cat brought their truck to special events they did not serve their usual pulled pork sandwich combo. They served only the sandwich, with no beans, coleslaw, or French fries. This enabled them to serve customers much more quickly and to reduce their price to $9 per serving. It also let them replace their expensive clamshell packaging with a much cheaper foil wrapping. With fewer side dishes and less expensive packaging, variable costs would be reduced by $1.90 per customer when compared to their normal menu. There were several other cost considerations related to the Bullarama event. First, the event organizers suggested a donation of $100. Second, their food truck ran on propane, and the 140 kilometer round trip to Barriere would add $100 to their typical fuel costs. Finally, in order to maximize space for the mobile cooking equipment, the truck only had one Redact Protect Optimize PDF 2. Fill & Sign Convert and edit! with Acrobat Pro Start Free Trial W Desktop - all c i O Sign U Sha ecial food, lors Search 'Bates ber Lo Export PDF Do Create PDF ate the cted Edit PDF Comment -cat Combine Files to mula TNICTC WCIC SEVCA ULTIC CUSC CUTISTUCILIUS CIC the Bullarama event. First, the event organizers suggested a donation of $100. Second, their food truck ran on propane, and the 140 kilometer round trip to Barriere would add $100 to their typical fuel costs. Finally, in order to maximize space for the mobile cooking equipment, the truck only had one seat (for the driver), so if Joe drove the food truck, Cat would need to drive her car separately, with an expected extra gas cost of $30. All of these costs would be avoided if they stayed home in Kamloops. The couple had one other concern. The organizers promised that Cat & Joe's Pig Rig would be the only food option available to event attendees, but the entrepreneurs had heard such promises before and found they were not always reliable. While they trusted the event organizers, they were worried about the potential for other onsite competitors. They planned to do calculations for multiple scenarios. The couple reminded themselves that business was good in Kamloops, but this represented an opportunity to expose their product to a new, potentially lucrative market. As Joe opened the calculator app on his smartphone, he reminded himself that numbers were important, but this decision would not be based on numbers alone. There were a lot of other factors to consider. El Organize Pages Redact ause oe O Protect em, Optimize PDF 2014, le Fill & Sign y had mod t the Convert and edit PC with Acrobat Pro Start Free Trial