Case Study > BADM 311 CASE STUDY #7. BADM 311 Individual Assignment #7 Lee’s Ice Cream

downloaded from

Scholarfriends

https://scholarfriends.com Downloaded by: writerforacademic@gmail.com | https://scholarfriends.com/singlePaper/273784/case-study-badm-311-case-study-7-badm311-individual-assignment-7-lees-ice-cream Distribution of this document is illegal.

BADM 311 Individual Assignment #7 Lee’s Ice Cream Name: Cindy Moscote Rodriguez Date: Thursday, February 28, 2018 U4-1. If you were in Jimmie’s shoes, would you sell Greg an equity stake in Lee’s Ice Cream? Explain. If Jimmie does sell equity to Greg for $3,300, what percentage of the business should he offer?

If I were in Jimmie’s shoes I would sell Greg an equity stake in Lee’s ice cream because at a minimum I would have to give him 24% of equity stake and that is only a small portion of my profits. Also, I could always buy them out when I have enough funds.

  

is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m

U4-2. Assume that Jimmie rejects Greg’s offer. Brainstorm and list three other financing strategies for Jimmie to investigate.

Rent equipment instead of buying.

Now that the loan is lower, Jimmie might be able to get a loan from the bank.

Talk to more friends about the business and see if any of them are willing to invest on the business.

U4-3. Jimmie’s mother agreed to loan him $3,000 at 8 percent interest. Calculate the total amount Jimmie will owe his mother: Jimmie owes his mother $3,132

U4-4. Jimmie will sell his ice cream cones for $2 each. Assume the following about Jimmie’s cost of goods sold for one ice cream cone: Soft serve ice cream: Ice cream cone: Napkin: Topping: a. What is the total COGS for one ice cream cone?

The total COGS for one ice cream is $0.30 b. What is Jimmie’s gross profit per unit?

Jimmie’s gross profit per unit is $2.7

$0.20 $0.05 $0.02 $0.03

Th

U4-5. Jimmie believes he can sell an average of 150 ice cream cones per day at $2 per cone. Jimmie operates his business 7 days per week between May and August, for a total of 123 days. Calculate the following:

sh

a. How many ice cream cones would Jimmie sell in total?

He would sell 18,450 ice cream cones in total. b. What would Jimmie’s total revenue be?

His total revenue would be $36,900 c. What would be Jimmie’s total COGS? His total COGS would be $5,535 d. Calculate Jimmie’s gross profit.

This study source was downloaded by 100000829877625 from CourseHero.com on 08-28-2021 06:55:17 GMT -05:00

https://www.coursehero.com/file/29616446/BADM-311-CASE-STUDY-7docx/

Jimmie’s gross profit would be $31,365 e. Assume that Jimmie’s total monthly operating costs are $1,500. His business operates for four months of the year. Calculate his total net profit for one year of business operations.

He would have a net profit of $29,865 for one year of business operations f. Create a projected income statement for the period from May 1 until August 31, 2012.

Remember to include the interest to his mother for the four months and taxes at 25%. Assume that there is no depreciation or operating costs other than those described in the case study.

Lee’s Ice Cream Income Statement for the period from May 1 until August 31, 2012

Conclusion

$36,900 $5,535 $5,535 $31,365

is ar stu ed d vi y re aC s o ou urc rs e eH w er as o. co m

Sales: Cost of Goods Sold: Materials Total COGS: Gross Profit: Fixed Operating Costs: Loan payment Administrative Total Fixed Operating Costs: Profit Before Taxes: Taxes (25%): Net Profit:

$3,132 $1,500

$4,632 $26,733 $6,683.25 $20,049.7 5

sh

Th

In conclusion, the ice cream truck is a really good idea if he plans to operate it himself, he might be able to afford one or two workers at minimum wage, but it will be more profitable if he works on it himself, which might be a bit exhausting. However, it is a good business that makes $20,000 is just four months.

He will be able to pay his mom back and still make a nice profit. The reason why this business is a good idea is because materials are very cheap making the Cost of Good Sold very low, therefore, he can keep his prices low and still make a good profit.

This study source was downloaded by 100000829877625 from CourseHero.com on 08-28-2021 06:55:17 GMT -05:00

https://www.coursehero.com/file/29616446/BADM-311-CASE-STUDY-7docx/ Powered by TCPDF (www.tcpdf.org)