Requirement #1 I will be starting a dog-walking business called Furiends. The business mission is to Improve
Question:
Requirement #1
I will be starting a dog-walking business called Furiends. The business mission is to "Improve the lives of pets and pet parents by proving safe, affordable and trustworthy pet services." The business will service customers by providing high quality dog walking services. It will solve the problem that many pet owners face of making time to provide the proper amounts of exercise for their pets. Furiends can help free up time and give pet owners peace of mind knowing that their pet is well taken care of.
Requirement #2
The major costs of Furiends include the costs for labor, supplies as well as website and marketing costs. It is important to determine the cost of providing your service to individual customers in order to price services correctly so that they reflect expenses and include a profit.
Costs for Furiends website is $20. Cost for labor will be about $12 per walk. Costs for supplies such as extra leashes, waste pick up bags, and water dispensers combined are $55. Marketing using flyers and Facebook ads will be around $30. It appears that direct costs would be more than overhead costs.
1. Costs (Categories)
I. Variable
Advertisement
II. Fixed
Employee Wages
Website
Equipment/Supplies
Advertisement
Rent
2. Price per unit
I. Hour long walk session (per pet) - $40 (Based on average rates)
I based rated on the assumption that each owner will be needing services for one pet, so I will not include discounts for additional pets.
https://homeguide.com/costs/dog-walking-prices
40 x 300 (5 walks day x 30 days = 150 per month x 2 employees)= 12,000
40 x 450 (5 walks day x 30 days =150 per month x 3 employees) = 18,000
3. Costs
I. Variable
Equipment/Supplies - 150
Total Variable - 150
II. Fixed
Website/Software - $90
Rent - 1000
Advertisement - $100
Employee wages
$12 per hour x 5 walks per day = $60
30 days per month x $60 per day = 1,800 per month
1,800 per month x 2 employees = $3,600
Total Fixed = 4,790
Variable Expenses
Equipment
300.00
Total Variable Expenses
300.00
Fixed Costs
Website/ software
90.00
Rent
1,000.00
Advertisement
100.00
Employee Wages
3,600.00
Total Fixed Costs
4,790.00
4. Contribution Margin Ratio
12,000-300/12000= 97.5 = 98%
5. Break-even point in terms of total revenues necessary to breakeven.
4,790/.98= 4,887.76
Requirement #5
Master Budget
1. Service Revenue Budget
10 walks per day x 30 days= 300 walks a month
15 walks per day x 30 days = 450 walks a month
We do not plan to increase clients until half a year into providing services. This is because we will not be hiring another provider until 6 months in.
Labor Budget
Month
Expected Service Units
Labor hours per unit
Total labor hours needed
Direct Labor cost per hour
Cost of labor
January
300
1
300
12
3,600
February
300
1
300
12
3,600
March
300
1
300
12
3,600
April
300
1
300
12
3,600
May
300
1
300
12
3,600
June
300
1
300
12
3,600
July
450
1
450
12
5,400
August
450
1
450
12
5,400
September
450
1
450
12
5,400
October
450
1
450
12
5,400
November
450
1
450
12
5,400
December
450
1
450
12
5,400
Service Revenue Budget
Month
Expected Service Units
Price per hour
Expected Service Revenue
January
300
40
12,000
February
300
40
12,000
March
300
40
12,000
April
300
40
12,000
May
300
40
12,000
June
300
40
12,000
July
450
40
18,000
August
450
40
18,000
September
450
40
18,000
October
450
40
18,000
November
450
40
18,000
December
450
40
18,000
Services Overhead Budget
Cost of Labor
Rent Expense
Total Overhead Expenses
January
3,600
1,000
4,600
February
3,600
1,000
4,600
March
3,600
1,000
4,600
April
3,600
1,000
4,600
May
3,600
1,000
4,600
June
3,600
1,000
4,600
July
5,400
1,000
6,400
August
5,400
1,000
6,400
September
5,400
1,000
6,400
October
5,400
1,000
6,400
November
5,400
1,000
6,400
December
5,400
1,000
6,400
https://www.amazon.com/
https://www.vistaprint.com/lpt/flyers-one-resp-4tiles-sizes-1.aspx?mk=vista+print+flyers&ad=p&crtv=324884230790&device=c&psloc=9028661&pstid=aud-821449301488%3akwd-307856385753&psite=mkwid%7cQztPcJsv&pscid=236440339&psagid=17268306979&psint=&psfid=&psnet=g&pspos=&psp1=%2432.39&psp2=&psaceid=&gclid=CjwKCAjwnef6BRAgEiwAgv8mQdxPlsLzsoWZB7BjW1J5igLZZ0oSkR32GltswQBYZgD-hYPhR5GIGRoCd1wQAvD_BwE&couponAutoload=1&expiredCouponCode=INVITE25&GP=09%2f10%2f2020+21%3a17%3a15&GPS=5747727184&GNF=1
https://www.timetopet.com/blog/the-costs-to-start-a-pet-sitting-or-dog-walking-business
https://www.squarespace.com/pricing/?channel=pnb&subchannel=go&campaign=pnb-dr-go-us-en-website-bmm&subcampaign=(website-website-build_Pricing-and-Plan-Features_sl)&utm_source=google&utm_medium=pnb&utm_campaign=pnb-dr-go-us-en-website-bmm&utm_term=%2Bwebsites&gclid=CjwKCAjwnef6BRAgEiwAgv8mQbxC_peAdgStmI4N-QDpHqw4kKecxvVI3q9QMGkQ_rDvWxsMIRNvLRoCsg0QAvD_BwE
Selling and Administrative Expense Budget
Month
Rent
Advertising
Website/ Software
Total budgeted SG&A
January
1,000
100
90
1,190
February
1,000
100
90
1,190
March
1,000
100
90
1,190
April
1,000
100
90
1,190
May
1,000
100
90
1,190
June
1,000
100
90
1,190
July
1,000
100
90
1,190
August
1,000
100
90
1,190
September
1,000
100
90
1,190
October
1,000
100
90
1,190
November
1,000
100
90
1,190
December
1,000
100
90
1,190
Budgeted Income Statement
Budgeted Revenue
180,000
Less Expenses
Selling and Administrative
(14,280)
Overhead Expenses
(66,000)
Net Income
99,720
Expert Answer:
