UrbanOpix Centre limited $($UCL$)$ sells prescription eyewear, provides eye examinations, and sells high end sunglasses.

It$$s early $2024,$ and the owner$/$founder Olivia Huber, is very disappointed with the financial results. She comes to you, CPA, looking for some advice.

Olivia has been trying to understand the profitability of her business and has prepared a product line analysis. Given her inexperience in accounting$/$finance$,$ Olivia has asked you to review her cost allocations, and make any required adjustments as provided in Appendix I.

Olivia is thinking about discontinuing sales of sunglasses. She asked you for your thoughts and impact it would have on UCL$$s profitability.

Olivia$$s friend Devon had recommended that she develop $$Key performance indicators$($KPIs$)$ to use in her business. Olivia is working how they could be useful to her and which KPIs she should implement and why. Olivia is wondering how they could be useful to her and which KPIs she should implement and why. Olivia has also asked you to provide an assessment of UCL$$s SWOT analysis.

As the number of patients increases, the number of eyewear sales also increase. Olivia is looking at partnering with a second optometrist $($Claudia$)$ and would like your thoughts. Olivia has provided some details of the potential arrangement in Appendix II$.$

Appendix I

Total Cost Allocation

Exams Prescription Eyewear Sunglasses

Revenue $$1190000$ $$511700$ $$571200$ $$107100$

Salaries $$225000$ $$96750$ $$108000$ $$20250$

Cost of sales $$400000$ $$172000$ $$192000$ $$36000$

Rent $$245000$ $$105350$ $$117600$ $$22050$

Utilities $$38950$ $$16748\mathrm{.}50$ $$18696$ $$3505\mathrm{.}50$

Depreciation $$65000$ $$27950$ $$31200$ $$5850$

Insurance $$55000$ $$23650$ $$26400$ $$4950$

Miscellaneous $$73000$ $$31390$ $$35040$ $$6570$

Promotional $$26500$ $$11395$ $$12720$ $$2385$

Total Expenses $$1128450$ $$485233\mathrm{.}50$ $$541656$ $$101560\mathrm{.}50$

$$61550$ $$26466\mathrm{.}50$ $$29544$ $$5539\mathrm{.}50$

Olivia allocates all expenses based on gross revenue.

$1.$ UCL has three employees: Olivia, Dean and Rose. Rose is the receptionist, while Dean focuses on sales.

Employee Salary Managerial Duties Eye Exams Prescription Eyewear Sunglasses

Olivia $$12000040\%60\%$

Rose $$4500070\%24\%6\%$

Dean $$6000080\%20\%$

$2.$ The cost of sales represents the amounts paid for materials, prescription eyewear and sunglasses during the year. Of this amount, $7\%$ relates to eye exams, $71\%$ relates to prescription eyewear and remaining $22\%$ relates to sunglasses.

$3.$ UCL has five$-$year lease contract, which cannot be modified, and no changes to the lease space can be made. The total space is $1500$ square feet. Of the space, $200$ sq feet relate to reception, $400$ to prescription eyewear, $125$ to sunglasses, $575$ is for the eye examination, with the remaining $200$ square feet is used as storage.

$4.$ Utilities primarily relate to electricity, which is driven by square footage.

$5.95\%$ of depreciation relates to eye exam equipment, with the remaining $5\%$ to furniture and fixtures. The eye exam equipment is old and will need replacing soon.

$6.$ Insurance is comprised of $$30000$ for professional liability insurance and $$25000$ for general premise insurance.

$7.$ Miscellaneous expenses relate to cleaning, internet, postage, and other minor costs.

$8.$ Advertising relates to local print advertisements that primarily focus on advertising eye examinations.

Appendix II

Claudia has been identified as a potential partner. Claudia is $30$ years old, became an optometrist two years ago has been working as an employee for another optometrist since then. Claudia is ambitious and loves the $$business side$$ of optometry. Claudia$$s goal is to become managing director of an optometry practice with a dozen optometrists within the next five to $10$ years. Her preference is to buy into an existing practice rather than be an employee, and to increase her share quickly over time while focusing on growth. Claudia also has an IT$/$Marketing background, helping with her dad$$s electrician business, by expanding the company$$s inline presence, including developing the company$$s website.

Claudia just had her first child, and her husband plans to stay home with their daughter for now, so the family will be counting on Claudia to earn a competitive salary. Claudia and her husband have no capital or savings to buy into the practice.

Olivia is $52$ and married with two daughters, aged $16$ and $22,$ who are students. Her family is wealthy, which allows her to take a below$-$market salary. Her goal is to expand her business slowly, without incurring additional debt. Olivia hopes to work for the next $10$ to $15$ years, and then sell her practice and retire. She is relying on realizing a significant profit when she sells the practice.

The addition of an optometrist would require the purchasing of a second set of examination equipment. As Claudia is technologically well$-$informed, she could set up the most up$-$to$-$date equipment, which could be expensive.

Olivia started UCL over $25$ years ago in Peterborough, Ontario. Dean and Ros