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Bottas was a hardworling and ambitious individual who had spent several years climbing the corporate laddet at a large manifacturing company. He had his eyes set on a promotion to a top managerial position, believing it to be the ultimate validation of his dedication and competence. However, despite his exceptional performance and unwavering commitment, Botras was unexpectedly passed over for the promotion he had been striving for. Devastated and disilluioned, he found himself questioning the corporate world and the values it espovised, Amidit his disappointment, Bottas stumbled vpon a chlldhood passion that had long been dormantcycling. He had always been captivated by the freedom and thrill of riding a bake, and this rediscovery sparked a new sense of purpoye within him, Determined to chart hs own path and create something meaninglu, Bottas made a life-altering decision-he would open a bike shop. With his savings of $9,000 and a reignited fire in his heart, Bottas immened himself in researching and undorstanding the intricacles of the cycling industry. He intends on taking some courses on bicyde maintenance, attending cycling trade shows, and engaging with local cycling communities. He estimates this will cost around $15,000 over the next two years, but will svve him from having to hire an additional bike mechanic- they are tough to lind these days! Armed his passion and entrepreneurial spirit, Bottas intends on opening a bke thop called Bottas Bikes In downtown Vancouver clove to the Seawall, which loops around Stanley Park, Bottas believes the shop will become a hub for cycling enthusiasts, novices and experts allie. Bottas intends on providing not orly sales and repair services but aks persenalized advice to ensure that every customer walks away with a bike perfectly sulted to their greferences and needs, His attention to detall, exceptional cutomer service, and genuine passion for cycling are what he believes will set Bottas Bikes apart from ether bike shops in the city. In his free time, Bottas has focused on bullding community engagement. He organized group rides, cycling workshops, and charity events fosteringa sense of camaraderie among his cuitomers. To maintain profitability and sustain growth, Bottes eikes needs to effectively manage costs, analyze its product lines, and make informed decisions based on reliable cost accounting information. He has spoken with a parts supplier, Limano, and will purchase parts wholesale, conduct the assembly of the bikes and customire and sell them to the final customers within the city. With an eye for quality and design, he besieves this will help differentate his bikes and help them sell at a premium. He intends to sell bikes for a markup of 65% over their full cont. To start the business, he will focus on the production of three popular bake fypes - mountain bikes, rood bikes and tandem bikes, Based on Eottas'r roveh research, it appears that there is an annual demand of approximately 10,000 mountain bikes, 5,000 rd bikes, and 2,000 tandem bikes. Bottas has collected a laundry list of costs that he thinis will be relevant to the income statement projections for the company. He estimates that of the costs provided 30% are indicet and 700 are direct costs, Of the costs above, Bottas wants to categoriae direct material, direct labour, and manulacturing overhead. He's uncertain of the differences between product and period costs and whihes to underitand these concepts a bit better. Bottas's friend lewis tells him that the best way to allocate his overhead is on the basis of direct labour hours. Bettas trusts lewis since he got the pramoticn in the corporate position. Given his revehue mark-up and costs highlighted, he is alse curious as to what the breairven number of bikes are that he shouid push to sell, He has seen that blke mechanics chacge around 530 to 5100 . Heis ikely to do the same, as he expects to spend about 7 hours a week on repairs for customers and clients. He will likely charge on a per hour basis plus parts. Rent on the store is contracted for 550 per square foot for a total of 2;226 square feet at the corner of Georgia 5 t and Denman Street. The expectation is that 50% of the space will be allocated fo repairs and storage and the other 500 will be retail space for bikes sales. A friend of Bottas, Emilia, woris full-time as a barista and is always locking for a snack while finishing her long rides. She's interested in subleating 25% of the total tpace to create a coffee shop with fresh baked healthy goodies to keep cyclists fueled on their rides- she thinks if will be ar great addition to the space. Errilia has promised to split her profits equally with Bottas if he provides the space for her for free. she thinis it's a great way to bring people into the store and advertise the bikes. Emilia anticipates she can generate $2,000 of monthly sales revemues to start fcost of sales wal be a constant 25% of revenues), but expects the revenue number to double up each quarter during the first year, and flat for the months after that. She'il spend $1,500 a month on advertisine fon a continual basis) for the store and help get the word out on social meda through her network of Vancouver cyclists, she came in first place at the last fonde Face and has had a bit of local stardom. Without Emilia. Bottas would likely have to pay $175,000 up-front for the same level of impact for advertising. He also intends to make a shiny new website and get heavily imyolved in social media marketing by paying 8 infiuencers $7,000 each to promote his products and services for the next yeat, He wants some cool videos of himself eyclins to prornote his bikes as well. He wants to ark some film students to do this for free for exposure and practice of their craft. One of the students sent him an angry email, but Bottas believes she will get over it. Hearing of his relationship with Limano, a competine company CRAM has come to Bottas and offered him a discount on the brake pads. Limano oflers them to Bottas for $50 per unit and CAAM is offering them for $40 per unit. Each blke needs two brake pands. Limano has been in the bike business for 102 years and CRAM has been in business for 36 years and focusing on innovation. The CRAM parts are manufactured locally, but there are talks of moving the operations 10 Latin America. Limano's. operations are located in Sfi Lanka and there is usually a three to six week wait when parts are ordared. however they have always been reliable and provide Bottas with loyalty disceunts on other parts provided. Bottas wants some assistance in deciding whether to incorporate his operations or keep operating by himself, He's also thought of bringing in Emalia in as a partner, but doesn't know how much money he himself, He's also thought of bringing in cmaia in as a partiner, but deesa her to imvest. She seems to be willing and have a bit of capital from the Fondo winnings that she can contribute Lasthy. Bottas wants to plan for the future and prepare a comprehensive budget for the next 12 months. Today is July 1 and he warts a rolling 12 manth budget incorporating all the costs and items detailed, He estimates that sales will be constant, but will spike by 15% next May and continue steadily into the summer manths, All other costs are expected to stay relatively constant each month. He kncws he hasn't given you all the infermation needed, and weltomes amy additional information you can provide. Having a pulse on the business is important so he is looking for your recommendation on how to evaluate each of the bike types and to have an idea of how to compare ectual results to budgeted. He also wants detailed inatructions on how to ensure he continually has up to date records and how to account for his business and what joumal entries he'll routinely see as he receives raw materials from Limano, assembles, stores and selis bikes. Prepare a business report for Bottas Bikes, providing specific, detalled recommendations. Discuss all relevant issues, ineluding pros and cons of each course of action Outline any questions or inquiries that should be directed to Blottas and why the information is important to certain deeisions

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