Chris has decided to invest in a tow truck to provide a call out service to customers. He feels that this will be a profitable investment and an opportunity for them to increase their profits. The truck will cost them £12,000 to buy second-hand and Chris estimates that there will be, on average, £49 of labour and petrol costs required for each call out. He expects the customer call out charge to be £145.

Chris estimates that he will receive approximately 200 ‘call outs’ in the first year. Calculate the expected annual profit the tow truck investment should make for Twiss Green Garage in its first year. (4 marks)

Prior to the business start-up Danielle and Claire had calculated that they would need 3000 customers, with a contribution per customer of £7.50 in their first year to break even, an average of 250 customers each month. The actual number of customers each month was 15% higher. Calculate the profit for the year that was generated.

Predicted Sales Revenue

£4,200

Variable Cost Per Record

£4

Fixed Costs

£1200

Average Number of Records Sold

350

Using the information above, calculate the expected profit for the coming month. (4 Marks)

Jenny knows that it is important to cover all of her costs so that she can at least break even. She estimates the following for the coming year:

Fixed costs – £42 525

Sales revenue – £135 144

Variable cost per item – £3

Expected sales – 11 262 items.

Calculate how many items Jenny needs to sell to break even (3 marks)

Fixed costs £16 800

Variable cost per event £140

Average price of each event £300

Number of events planned 280

Using the information above calculate the contribution per unit (2 marks)

Fixed costs £16 800

Variable cost per event £140

Average price of each event £300

Number of events planned 280

Using the information above calculate the Total Costs (2 marks)

Cash sales £65 303

Credit sales £13 609

Wages and salaries £19 500

Cash purchases £286

Credit purchases £10 080

Rent and business rates £25 600

Utilities £6 200

Other costs £4 580

Trade receivables £1 400

Closing inventories £712

Opening inventories £0

Trade payables £472

Using the information calculate the Gross Profit (4 marks)

Selling price of each sandwich £3.80

Cost of filling for each sandwich 50p

Cost of bread for each sandwich 40p

Packaging cost for each sandwich 20p

Sales, in units, to break-even 3 500

Calculate the annual total revenue that selling 70 sandwiches a week would generate for the business (2 marks)

• £266

• £12 768

• £13 832

• £9 828

Sales 101 500

Utilities 4 200

Purchases 39 664

Lease of shop premises 18 000

Wages 19 200

Other costs 1 656

Closing inventory 214

Opening inventory 162

The new forecast statement of comprehensive income will need to take into account:

• a planned 4% increase in wages for the last six months from July to December 2019

• a prepayment of £3 000 for lease of the shop premises has been made for the financial year 2020.

Calculate the Net Profit (9 marks)