APPENDIX A: CASE VIGNETTES
EXHIBIT 20: INCOME STATEMENT -- IME JANETORIAL SERVICES SALES: See Exhibit 17 to see how CVE calculated IME revenue projections.
COST OF SALES: To calculate cost of sales, CVE determined how many staff and supervisors were needed per square foot, what the wage was per person and calculated wage costs, etc. No benefits are listed in Year 1 as employees receive this benefit only after one year of tenure.
OPERATING EXPENSES: All of IME operating expenses were “fixed costs” which were adjusted here for inflation. A Management Assistant was also added in Year 3.
YEAR 1 LOSS: The loss calculated by CVE in Year 1 was added to the start-up costs required for IME (see Exhibit 18).
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PROJECTIONS Sales
Year 1 162,500
Cost of Sales Wages Employees Supervisors Taxes Benefits Training Supplies Transportation Repairs and Maintenance Total Cost of Sales GROSS PROFIT
85,852 18,720 11,346 3,000 2,060 1,000 800 122,778 39,722
172,973 37,440 22,830 8,068 3,000 4,120 2,000 1,000 251,431 86,069
207,168 49,400 27,838 10,119 3,000 5,150 2,500 1,000 306,175 113,825
OPERATING EXPENSES Enterprise Manager Salary Management Assistant Payroll Tax Rent and Utilities Phone Insurance and Workers Compensation License and Bonding Office Supplies Advertising and Promos Total
50,000 5,031 4,914 398 6,410 184 567 3,250 70,754
50,000 5,957 5,040 410 10,114 211 583 6,750 79,065
50,000 15,000 7,421 5,040 422 12,255 218 601 8,400 99,357
Net Income before Support Services and Subsidies Profit Margin
(31,032) -19.10%
7,004 2.08%
14,468 3.44%
Total
8,000 3,000 11,000
8,000 3,000 11,000
8,000 3,000 11,000
Total NET INCOME PROFIT MARGIN
8,000 50,000 58,000 15,968 9.83%
8,000 25,000 33,000 29,004 8.59%
8,000 25,000 33,000 36,468 8.68%
Support Services Expense Administrative Support Additional Support Grants and Subsidies C&C/DR Contract REDF
Year 2 337,500
Year 3 420,000 “SENSITIVITY ANALYSIS”: The income statement shows that viability of the IME enterprise is much more dependent on managing labor costs than supply costs (since employee costs are proportionally much higher than supply costs, for example). Therefore, it would be very important for CVE to monitor IME labor costs closely (see section 5.8).
G E T R E A D Y, G E T S E T . . .