Problem : You are a very savvy college student and start your own food stand from a...

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Finance

Problem :
You are a very savvy college student and start your own foodstand from a catering truck. You understand the thought process ofyour peers and decide to do business when it would be mostprofitable, from 10:00pm to 3:00am. Considering vacations andfinals, you only operate the catering truck 320 days per year. Thetruck is leased by you for $1000/month with a continuous 12 monthlease. Additional expenses for insurance, maintenance, etc come outto $2000 per year. You also have 2 employees that work for $10/hr.However since they are very good employees, they alternate days andonly one employee covers each shift. Also, you sell your productswith a gross margin of 80% on every item.
1. Create a plausible income statement for 1 year of businesssuch that you have a before tax income of $75,000.00. Do notconsider income taxes for this homework assignment.
2. What were your total sales for the year?
3. Is this plausible in the amount of time that you areopen?

Answer & Explanation Solved by verified expert

4.5 Ratings (819 Votes)

Total annual lease expenses 1000 per month12 months 12000 Annual expenses for insurance maintenance etc 2000 Employee expenses 320 days per year 5 hours per day 10 per hour 16000 Note that each employee will work for only 32025 800 See Answer

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Problem :You are a very savvy college student and start your own foodstand from a catering truck. You understand the thought process ofyour peers and decide to do business when it would be mostprofitable, from 10:00pm to 3:00am. Considering vacations andfinals, you only operate the catering truck 320 days per year. Thetruck is leased by you for $1000/month with a continuous 12 monthlease. Additional expenses for insurance, maintenance, etc come outto $2000 per year. You also have 2 employees that work for $10/hr.However since they are very good employees, they alternate days andonly one employee covers each shift. Also, you sell your productswith a gross margin of 80% on every item.1. Create a plausible income statement for 1 year of businesssuch that you have a before tax income of $75,000.00. Do notconsider income taxes for this homework assignment.2. What were your total sales for the year?3. Is this plausible in the amount of time that you areopen?