Proposed project: Palm Springs Store Investment required $250,000 Last year's operating numbers from the Goodyear Store: Goodyear Last year Cases sold 13,000 Price per case $75.00 Gross revenues $975,000 Gross profit $438,750 Rent $60,000 Labor $207,360 Utilities $18,000 Taxable income $250,890 Calculate the break-even number of cases for Palm Springs Number of cases sold Gross profit per case Gross profit Rent Labor Utilities EBT Gross profit per cashx number of cases sold 30% higher than Goodyear 25% higher than Goodyear 33% higher than Goodyear Based on the breakeven number, would you recommend opening the store in Palm Springs? Why or why not? Palm Springs investment recovery Expected annual growth in labor costs Expected annual growth in utility costs Annual growth rate in cases sold 296 396 1 2 3 4 5 Cases sold Gross profit Rent Labor Utilities Taxable income Investment recovered Example: Break-even sales. Glenn is considering opening a new store in Palm Springs. Glenn expects the store in Palm Springs to operate much like his existing store in Goodyear. Glenn thinks his gross profit per case in Palm Springs will be the same as the Goodyear store, but he expects higher labor, rent and utility costs. Last year the Goodyear store sold 13,000 cases at a gross profit of $33.75/case which provided total gross profit of 13,000 $33.75=$ 438,750.His projections for next year are as follows: Item Goodyear Forecast for Palm Springs store Cases sold 13,000 Gross profit ($33.75/case) $438.750 Rent $60,000 30% higher than Goodyear $207,360 25% higher than Goodyear Utilities $18,000 33% higher than Goodyear Taxable income $153,390 Glenn is concerned about stronger competitors in the Palm Springs area. He estimates that he can sell at least 11,000 cases in Palm Springs next year, but he is worried that the store will be not be able to match the 13,000 cases sold at the Goodyear store. Glenn has hired you as a consultant to help him estimate the number of cases he would need to sell at the Palm Springs store next year to break even. Break even means that he will sell just enough cases to cover his operating expenses (Rent, Labor and Utilities) and the Taxable income is $0. Labor Proposed project: Palm Springs Store Investment required $250,000 Last year's operating numbers from the Goodyear Store: Goodyear Last year Cases sold 13,000 Price per case $75.00 Gross revenues $975,000 Gross profit $438,750 Rent $60,000 Labor $207,360 Utilities $18,000 Taxable income $250,890 Calculate the break-even number of cases for Palm Springs Number of cases sold Gross profit per case Gross profit Rent Labor Utilities EBT Gross profit per cashx number of cases sold 30% higher than Goodyear 25% higher than Goodyear 33% higher than Goodyear Based on the breakeven number, would you recommend opening the store in Palm Springs? Why or why not? Palm Springs investment recovery Expected annual growth in labor costs Expected annual growth in utility costs Annual growth rate in cases sold 296 396 1 2 3 4 5 Cases sold Gross profit Rent Labor Utilities Taxable income Investment recovered Example: Break-even sales. Glenn is considering opening a new store in Palm Springs. Glenn expects the store in Palm Springs to operate much like his existing store in Goodyear. Glenn thinks his gross profit per case in Palm Springs will be the same as the Goodyear store, but he expects higher labor, rent and utility costs. Last year the Goodyear store sold 13,000 cases at a gross profit of $33.75/case which provided total gross profit of 13,000 $33.75=$ 438,750.His projections for next year are as follows: Item Goodyear Forecast for Palm Springs store Cases sold 13,000 Gross profit ($33.75/case) $438.750 Rent $60,000 30% higher than Goodyear $207,360 25% higher than Goodyear Utilities $18,000 33% higher than Goodyear Taxable income $153,390 Glenn is concerned about stronger competitors in the Palm Springs area. He estimates that he can sell at least 11,000 cases in Palm Springs next year, but he is worried that the store will be not be able to match the 13,000 cases sold at the Goodyear store. Glenn has hired you as a consultant to help him estimate the number of cases he would need to sell at the Palm Springs store next year to break even. Break even means that he will sell just enough cases to cover his operating expenses (Rent, Labor and Utilities) and the Taxable income is $0. Labor