Description
Project Overview
You will complete a Calculations and Report Document for this project. In part one, you will represent problems as mathematical expressions that you will then solve. In part two, you will explain what your calculations mean and how they inform your thinking about the problems. The ability to solve problems with math will help you with everything from managing your finances to baking new recipes.
Competency
In this project, you will master the following competency:
Use basic quantitative methods of problem solving
Scenario
You work at All-Store, a large general store that sells everything from groceries and office supplies to medicine, toys, and books. Unfortunately, the company’s profits have been down for the last six months because of competition, specifically from other local businesses and online vendors.
Jill Oliviera, All-Store’s general manager, has decided to rethink the store’s business strategies. One of her new ideas is to focus the business on just a few departments. This way, All-Store can specialize in those areas rather than continuing to support all of the current offerings.
Due to declining sales and the upcoming changes, Jill is worried about the business’s finances. She’s given you access to several company files and asked you to prepare a report. Your report should cover different situations that the business may face in the coming months.
Directions
Your manager is looking for your recommendations for how the store could best respond to: declining sales, reducing staffing, and purchasing the building.
To do this, download and fill out the Calculations and Report Document in the “What to Submit” section.
As you complete part one of this document, break down each of the three problems individually. When representing problems as expressions, don’t be afraid to try a few equations for each step to see what works. Use information and data from the company files in the “Supporting Materials” section to answer the questions.
In part two, give your recommendations to your manager: what do you think the company should do about declining sales, reducing staffing, and purchasing the building? Be sure to support your recommendations with quantitative evidence. Then, explain how you used mathematical expressions to solve these problems.
When you have completed both parts of the Calculations and Report Document, you can submit it as your deliverable.
What to Submit
Every project has a deliverable or deliverables, which are the files that must be submitted before your project can be assessed. For this project, you must submit the following:
Calculations and Report Document
Download and complete the Calculations and Report Document. Make sure that you have answered all of the questions in part one and part two.
Supporting Materials
The following resources will help support your work on the project:
Company Files
All-Store Profit and Loss Statement
Review this statement that details All-Store’s finances over the last six month
All-Store Store Hours and Staffing Notes Store Hours (require at least six sales associates and one manager during nonpeak hours): •
Monday–Saturday: 7:00a.m.–10:00p.m. • Sunday: 9:00a.m.–10:00p.m. Peak Hours (require at least 10 sales associates and two managers): • Monday, Thursday, and Friday: 5:00p.m.–7:00p.m. • Saturday: 10:00a.m.–7:00p.m. • Sunday: 12:00p.m.–5:00p.m. Notes from the General Manager: • There are two types of employees: sales associates and managers. • Sales associates have an estimated labor cost of $12.50 per hour. • Managers have an estimated labor cost of $20 per hour. • Labor cost includes all taxes, benefits, and other costs, so you do not need to take those into account. • Managers are full-time, so they typically work approximately 40 hours per week. • Sales associates are part time, so they must work no more than 30 hours per week. • Please don’t take time off into account in your work. • These are the minimum requirements for continuous coverage, and must be met in order for the store to run.
All-Store Hours and Staffing Notes
Review these notes from your general manager on staffing.
All-Store Loan Estimate
Review this loan estimate based on the possibility of buying the building.
All-Store June Bank Account Statement
Review All-Store’s bank account statement from the month of June.
Unformatted Attachment Preview
Your Account Summary
Balance as of June 23: $50,396.00
Total Withdrawals: $67,548.51
Total Deposits: $67,698.94
Balance as of June 30: $50,546.43
Date
23-Jun
24-Jun
24-Jun
24-Jun
24-Jun
25-Jun
25-Jun
25-Jun
25-Jun
26-Jun
27-Jun
27-Jun
27-Jun
27-Jun
28-Jun
28-Jun
28-Jun
30-Jun
30-Jun
30-Jun
Description
DEPOSIT
GOODS DELIVERY
SHIPPING CHARGE
DEPOSIT
MKTING SVC
ACCOUNTING SVCS
GOODS DELIVERY
SHIPPING CHARGE
DEPOSIT
PAYROLL
GOODS DELIVERY
GOODS DELIVERY
SHIPPING CHARGE
DEPOSIT
GOODS DELIVERY
SHIPPING CHARGE
DEPOSIT
RENTAL CHARGE
SHIPPING CHARGE
DEPOSIT
Withdrawals
$
$
Deposits
$
8,698.18
$
7,442.06
$
9,334.62
$
8,282.30
$
10,532.21
$
23,409.57
6,445.16
100.00
$ 13,598.32
$
$
$
11,116.00
4,796.55
100.00
$
$
$
$
3,821.93
1,706.14
12,056.00
100.00
$
$
8,408.41
200.00
$
$
5,000.00
100.00
Balance
$59,094.18
$52,649.02
$52,549.02
$59,991.08
$46,392.76
$35,276.76
$30,480.21
$30,380.21
$39,714.83
$35,892.90
$34,186.76
$22,130.76
$22,030.76
$30,313.06
$21,904.65
$21,704.65
$32,236.86
$27,236.86
$27,136.86
$50,546.43
All-Store Store Hours and Staffing Notes
Store Hours (require at least six sales associates and one manager during nonpeak hours):
•
Monday–Saturday: 7:00a.m.–10:00p.m.
•
Sunday: 9:00a.m.–10:00p.m.
Peak Hours (require at least 10 sales associates and two managers):
•
Monday, Thursday, and Friday: 5:00p.m.–7:00p.m.
•
Saturday: 10:00a.m.–7:00p.m.
•
Sunday: 12:00p.m.–5:00p.m.
Notes from the General Manager:
•
There are two types of employees: sales associates and managers.
•
Sales associates have an estimated labor cost of $12.50 per hour.
•
Managers have an estimated labor cost of $20 per hour.
•
Labor cost includes all taxes, benefits, and other costs, so you do not need to take those into
account.
•
Managers are full-time, so they typically work approximately 40 hours per week.
•
Sales associates are part time, so they must work no more than 30 hours per week.
•
Please don’t take time off into account in your work.
•
These are the minimum requirements for continuous coverage, and must be met in order
for the store to run.
Loan Estimate
Date Issued
June 16
Loan ID
#123456789
Applicant
All-Store
Loan Term
5 years
Sale Price
$150,000
Purpose
Purchase
Loan Terms
Loan Amount
$100,000
Interest Rate
7.00%
Monthly Principal and Interest
$1,980.12
Prepayment Penalty
No
Balloon Payment
No
Fixed rate
Projected Payments
Years 1–5
Years 6–10
Years 11–15
Monthly Principal and Interest
$1,980.12
N/A
N/A
Property Insurance
$250.00
N/A
N/A
Property Taxes in Escrow
$1250.00
N/A
N/A
Total Monthly Payment
$3480.12
N/A
N/A
Costs at Closing
Estimated Closing Costs
$0.00
Note: Closing costs paid by seller
Down Payment
$50,000.00
Due to seller
1
All-Store Profit & Loss Statement
Net Profit (income)
$150,000.00
$100,000.00
$50,000.00
$January
February
March
April
May
June
Profit & Loss
Total revenue
Less cost of goods sold
Gross Profit
$
$
$
January
650,037.00 $
425,774.24 $
224,262.77 $
February
622,477.00 $
407,722.44 $
214,754.57 $
March
594,917.00 $
389,670.64 $
205,246.37 $
April
567,357.00 $
371,618.84 $
195,738.17 $
May
539,797.00 $
353,567.04 $
186,229.97 $
June
512,237.00
335,515.24
176,721.77
Less
Expenses
Accounting and legal fees
Advertising
Depreciation
Electricity
Insurance
Interest and bank charges
Shipping & postage
Printing and stationery
Professional memberships
Rent for premises
Repairs and maintenance
Training
Wages and salaries
Workers compensation
Total Expenses
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,597.00
10,424.43
3,800.00
2,700.00
9,200.00
504.46
1,601.88
488.35
580.00
5,000.00
774.14
121.85
47,000.00
3,500.00
88,292.11
2,273.00
7,828.92
3,800.00
2,700.00
9,200.00
409.24
2,816.37
715.25
580.00
5,000.00
209.72
191.27
45,698.00
3,500.00
84,921.76
2,396.00
5,432.84
3,800.00
2,700.00
9,200.00
344.53
2,116.86
542.00
580.00
5,000.00
455.88
170.53
48,111.00
3,500.00
84,349.64
2,788.00
8,426.54
3,800.00
2,700.00
9,200.00
569.77
2,338.60
371.18
580.00
5,000.00
935.95
176.69
47,327.00
3,500.00
87,713.74
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,328.00
1,735.09
3,800.00
2,700.00
9,200.00
331.61
2,092.21
484.02
580.00
5,000.00
80.64
177.25
44,779.00
3,500.00
76,787.83
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,116.00
6,167.04
3,800.00
2,700.00
9,200.00
586.74
2,324.49
456.18
580.00
5,000.00
812.08
146.02
45,819.00
3,500.00
83,207.55
Equals
Net Profit (income)
$
135,970.66 $
108,024.43 $
109,442.14
$
93,514.22
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
129,832.81 $
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
120,896.73 $
All-Store Calculations and Report
Note: Complete this worksheet by replacing the bracketed phrases in the response boxes with the
relevant information.
Name: [Insert name here.]
You need to analyze three areas of the All-Store business: declining sales, reducing staffing, and
purchasing the building. Before you start, read all of the All-Store company documents in the
“Supporting Materials” section. These will have useful information that will help you complete your
project.
Note: You can use a calculator to complete the calculations. Make sure to show and check all of your
work.
Part 1: Your Calculations
Declining Sales
The general manager wants to know what the impact will be on the business if sales continue to decline
at the current rate and no action is taken. This can be broken down into two questions:
•
•
How long will it be before All-Store starts operating at a loss?
How long will it be before All-Store goes bankrupt?
How Long Before All-Store Starts Operating at a Loss?
When a company makes less money than it spends, this is referred to as operating at a loss. Another
way to express this is “the net profit equals zero.”
When will All-Store’s monthly profit equal zero? Although there’s no precise answer to this question,
since the future is unpredictable, you can estimate based on some available data. In the following steps,
you will estimate the monthly drop in profits. Then, you’ll formulate a projection to determine when AllStore would be operating at a loss.
1. Monthly Net Profit
List each month’s net profit in the following response box.
[Insert response here.]
2. Difference between Monthly Net Profits
1
Calculate the difference between each month’s net profits. For example, subtract January’s
profit from February’s profit. Then subtract February’s profit from March’s profit. Continue this
process for each month.
[Insert response here.]
3. Profit Drop
Determine how much profits will drop in the following months. You’ll need to estimate based on
all of the previous numbers. One way to do this is by choosing a number that represents
something close to the middle of the values, or a measure of central tendency. Mean, median,
and mode are three different measures of central tendency. Calculate each measure in the
following response box.
4. To calculate the mean (average):
o Add all of the numbers in the series together.
o Divide them by the quantity of numbers added.
o Note: You may need to round up or down to the nearest cent.
5. To calculate the median (middle):
o List all of the numbers in the series in order (low to high, or high to low).
o Choose the one in the middle of the list.
6. To calculate the mode (most frequent):
o List all of the numbers in order (from lowest to highest or highest to lowest).
o Choose the number that appears the most often. If no numbers repeat in a series, then
there is no mode.
[Insert response here. Show your work.]
7. Mode of Central Tendency Used to Predict the Upcoming Months
• Which value(s) will you use to make your projections? Why?
• Is there value in showing more than one projection in your report? Why or why not?
[Insert response here.]
8. Projection
2
Now that you’ve chosen a way (or ways) to estimate, it’s time to project the month. To do this:
• Divide the last number in the series (the net profit from June) by the measures of
central tendency you calculated in question 3.
• If there is a decimal in your result, round down to the nearest month.
[Insert response here. Show your work.]
How Long Before All-Store Goes Bankrupt?
Bankruptcy is when a person or company runs out of money and cannot afford to pay the bills. It can
also refer to the legal processes involved in dealing with this situation. For All-Store, bankruptcy could
include missing payments on anything from rent to payroll. In this section, you will use your estimate for
the monthly drop in profits, which you already calculated, to project when this will occur.
9. All-Store Savings
Find the current amount of funds that All-Store has in savings. Read the company documents in
the “Supporting Materials” section to learn this information.
[Insert response here.]
10. How Long All-Store Can Operate at a Loss
Although the company will be operating at a loss, All-Store has some money in savings that will
allow it to pay for expenses for a time. In the response box, determine this time in months. To
do this:
• Add the amount in savings to the net profit from June.
• Divide by the number(s) you determined above (mean, median, mode).
• If there is a decimal in your result, round down.
[Insert response here. Calculate the loss three times. Use the mean the first time, median the
second time, and mode the third time.]
11. Summary
Reflect on the meaning of your calculations. Consider the following questions:
• What do you think the results of your calculations will mean for the company?
3
•
What specific actions would you recommend based on all of the available information?
For example, what is a specific way for the company to cut costs?
[Insert your summary here. You will need to include this summary in your report using specific
calculations to support your recommendations.]
Skeleton Crew
The general manager wants to know what All-Store’s options are for reducing staffing if the business
needs to cut back on payroll. You will break this question down into three smaller questions:
• How many peak and nonpeak hours are there during the week? Peak refers to busy times and
nonpeak refers to less busy times.
• What is the minimum labor cost per week?
• What is the minimum number of people needed during store hours?
How Many Peak and Nonpeak Hours Are There during the Week?
12. Store Hours
How many total hours is the store open each day? This is a small piece of the larger problem,
but the results can inform the rest of your calculations.
[Insert response here. Show your work.]
13. Peak Hours
What are the total peak hours for a week? To do this, add the peak hours for each day together.
[Insert response here. Show your work.]
14. Nonpeak Hours
What are the total nonpeak hours for the week? To do this, subtract the peak hours from the
total hours.
4
[Insert response here. Show your work.]
What Is the Minimum Labor Cost Per Week?
The general manager provided you with the hourly wages for sales associates and managers, as well as
how many of each type of staff are needed during peak and nonpeak hours. To determine the minimum
labor costs per week, you will need to use the total hours that you calculated in the previous section.
15. Minimum Sales Associate Hours
What is the minimum number of sales associate hours needed each week? To calculate this:
• Multiply the number of sales associates needed during peak times by the number of
peak hours.
• Multiply the number of sales associates needed during nonpeak times by the number of
nonpeak hours.
• Add those two numbers together.
[Insert response here. Show your work.]
16. Minimum Manager Hours
What is the minimum number of manager hours needed each week? To calculate this:
• Multiply the number of managers needed during peak times by the number of peak
hours.
• Multiply the number of managers needed during nonpeak times by the number of
nonpeak hours.
• Add those two numbers together.
[Insert response here. Show your work.]
17. Total Labor Costs Per Week
What is the minimum total labor cost per week? To calculate this:
• Multiply the number of sales associate hours by the sales associate hourly labor cost.
• Multiply the number of manager hours by the manager hourly labor cost.
• Add those two numbers together.
5
[Insert response here. Show your work.]
How Many Staff Are Required to Ensure Continuous Coverage?
18. Minimum Number of Sales Associates
Calculate the minimum number of sales associates by dividing the number of total hours needed
by the number of hours per week that a sales associate may work.
[Insert response here. Show your work.]
19. Reflect on Your Answer to Question 18
If your result was a decimal, will you round up or down in your report? Why?
[Insert response here.]
20. Calculate the Minimum Number of Managers
To do this, divide the number of total hours needed by the number of hours per week that a
manager may work.
[Insert response here. Show your work.]
21. Reflect on Your Answer to Question 20
If your result was a decimal, will you round up or down in your report? Why?
[Insert response here.]
22. Summary
6
Summarize what you think the results of your calculations will mean for All-Store.
• What specific actions would you recommend based on all of the available information? For
example, what are some options for future staffing, should sales continue to decline?
[Insert response here. You will need to incorporate this summary into your report and
mention specific calculations to justify your recommendations.]
Rent vs. Buy
The building’s owner approached the general manager about her interest in purchasing the building.
Your manager wants to know what would be the immediate financial impact of purchasing the building.
You will break this question down into the following questions:
• What is the difference in monthly cost between renting and buying?
• Given the down payment required, how many months would it be before the purchase paid for
itself?
What Is the Difference in Monthly Cost between Renting and Buying?
23. Monthly Cost of Rent
What is the monthly cost of rent? Review the profit and loss statement or the June bank
account statement for this information.
[Insert response here.]
24. Total Monthly Payment of the Loan
What is the total monthly payment of the loan? Review the loan estimate document.
[Insert response here.]
25. Cheaper Monthly Payment
Find the difference between the monthly rent and the monthly loan payment, and identify
which one is the cheaper monthly payment.
7
[Insert response here.]
Given the Down Payment Required, How Many Months Would It Be before the Purchase Paid for Itself?
People say that something “has paid for itself” when the financial benefits over time equal the initial
investment. In this section, you will calculate how many years it will be before All-Store saves money.
26. Months Until It Pays for Itself
Divide the initial investment (i.e., the down payment) by the amount saved each month (which
you calculated above). The result will be in months. If it is a decimal, round up.
[Insert response here. Show your work.]
27. Convert to Years
What is this estimate in years?
[Insert response here. Show your work.]
28. Reflect
Reflect on your answer. Address the following questions in your response:
a. Is the answer to the previous question more or less than the term of the loan?
b. What would be the immediate impact to All-Store’s savings?
[Insert response here.]
29. Summary
Summarize what you think the results of your calculations will mean for the company. What
specific actions would you recommend based on all of the available information? For example, is
this a good time to buy? You will need to include this summary in your report and mention
specific calculations to justify your recommendations.
8
[Insert response here.]
Part 2: Your Report to Your Manager
Use the following template to write a report to your manager with your findings. Make sure to support
your recommendations with qualitative evidence.
Declining Sales
Recommendations for Declining Sales (100–150 words)
Make your recommendations about the impact of All-Store’s declining sales. Use your response to
question 8 in part one to help you get started. Your recommendations should be supported by detailed
quantitative evidence.
[Insert response here.]
Analysis of Declining Sales (100–150 words)
Explain your use of mathematical expressions in solving problems. You may use text, images, or graphs.
[Insert response here.]
Skeleton Crew
Recommendations for Skeleton Crew (100–150 words)
Make your recommendations about All-Store’s staffing. Use your response to question 19 in part one to
help you get started. Your recommendations should be supported by detailed quantitative evidence.
[Insert response here.]
Analysis of Skeleton Crew (100–150 words)
9
Explain your use of mathematical expressions in solving problems. You may use text, images, or graphs.
[Insert response here.]
Rent vs. Buy
Recommendations for Rent vs. Buy (100–150 words)
Make your recommendations about All-Store purchasing the building or continuing to rent. Use your
response to question 26 in part one to help you get started. Your recommendations should be
supported by detailed quantitative evidence.
[Insert response here.]
Analysis of Rent vs. Buy (100–150 words)
Explain your use of mathematical expressions in solving problems. You may use text, images, or graphs.
[Insert response here.]
10
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