Three years ago, Vincent Chow completed his college degree. Theeconomy was in a depressed

state at the time, and Vincent managed to get an offer of only$25,000 per year as a bookkeeper. In

addition to its relatively low pay, this job had limitedadvancement potential. Since Vincent was an

enterprising and ambitious young man, he instead started abusiness of his own. He was convinced

that because of changing lifestyles, a drive-through coffeeestablishment would be pro?table. He

was able to obtain backing from his parents to open such anestablishment close to the industrial

park area in town. Vincent named his business The CappuccinoExpress and decided to sell only

two types of coffee: cappuccino and decaffeinated.

As Vincent had expected, The Cappuccino Express was very wellreceived. Within three

years, Vincent had added another outlet north of town. He leftthe day-to-day management of each

site to a manager and turned his attention toward overseeing theentire enterprise. He also hired an

assistant to do the record keeping and other selectedchores.

REQUIRED

a. Develop an organization chart for The Cappuccino Express.

b. What factors can be expected to have a major impact on thesuccess of The Cappuccino

Express?

c. What major tasks must Vincent undertake in managing TheCappuccino Express?

d. What are the major costs of operating The CappuccinoExpress?

e. Vincent would like to monitor the performance of each sitemanager. What measure(s) of

performance should he use?

f. If you suggested more than one measure, which of these shouldVincent select if he could use

only one?

g. Suppose that last year, the original site had yielded totalrevenues of $146,000, total costs

of $122,000, and hence, a pro?t of $24,000. Vincent had judgedthis pro?t performance to

be satisfactory. For the coming year, Vincent expects that dueto factors such as increased

name recognition and demographic changes, the total revenueswill increase by 20 percent to

$175,200. What amount of pro?t should he expect from the site?Discuss the issues involved

in developing an estimate of pro?t.