MGS 3040-03Chapter 3

Application Exercise #1 pg. 87Claudette, Aleksey, Jadwiga, Barbara, Susan, &

Justin

Resort Bicycle Rental

Bicycle Inventory ValuationThursday ,September 24, 2009

Make of Bike Bike CostNumber on Hand

Cost of Current Inventory

Number of Renatals

Total Rental Revenue

Revenue Per Bike

Revenue as percent of Cost of Inventory

Wonder Bike $325 12 85 $6,375

Wonder Bike II $385 4 34 $4,570

Wonder Bike Supreme $475 8 44 $5,200

Litelift Pro $655 8 25 $2,480

Litelift Ladies $655 4 40 $6,710

Litelift Racer $795 3 37 $5,900

The Given Information:

Cost of Current Inventory=Bike cost * Number of Bikes on Hand

Resort Bicycle RentalBicycle Inventory Valuation

Thursday ,September 24, 2009

Make of Bike Bike CostNumber on Hand

Cost of Current Inventory

Number of Renatals

Total Rental Revenue

Revenue Per Bike

Revenue as percent of Cost of Inventory

Wonder Bike $325 12 $3,900 85 $6,375 Wonder Bike II $385 4 $1,540 34 $4,570 Wonder Bike Supreme $475 8 $3,800 44 $5,200 Litelift Pro $655 8 $5,240 25 $2,480 Litelift Ladies $655 4 $2,620 40 $6,710 Litelift Racer $795 3 $2,385 37 $5,900

Bike Cost Number on Hand Cost of Current Inventory325 12 =B7*C7385 4 =B8*C8475 8 =B9*C9655 8 =B10*C10655 4 =B11*C11795 3 =B12*C12

Revenue Per Bike= Total Rental Revenue/ Number of Bikes on Hand

Resort Bicycle RentalBicycle Inventory Valuation

Thursday ,September 24, 2009

Make of Bike Bike CostNumber on Hand

Cost of Current Inventory

Number of Renatals

Total Rental Revenue

Revenue Per Bike

Revenue as percent of Cost of Inventory

Wonder Bike $325 12 $3,900 85 $6,375 $531 Wonder Bike II $385 4 $1,540 34 $4,570 $1,143 Wonder Bike Supreme $475 8 $3,800 44 $5,200 $650 Litelift Pro $655 8 $5,240 25 $2,480 $310 Litelift Ladies $655 4 $2,620 40 $6,710 $1,678 Litelift Racer $795 3 $2,385 37 $5,900 $1,967

Total Rental Revenue Revenue Per Bike6375 =F7/C74570 =F8/C85200 =F9/C92480 =F10/C106710 =F11/C115900 =F12/C12

Number on Hand1248843

Revenue as a Percent of Cost of Inventory=Total Rental Revenue/ Cost of Current Inventory

Resort Bicycle RentalBicycle Inventory Valuation

Thursday ,September 24, 2009

Make of Bike Bike CostNumber on Hand

Cost of Current Inventory

Number of Renatals

Total Rental Revenue

Revenue Per Bike

Revenue as percent of Cost of Inventory

Wonder Bike $325 12 $3,900 85 $6,375 $531 163.5%Wonder Bike II $385 4 $1,540 34 $4,570 $1,143 296.8%Wonder Bike Supreme $475 8 $3,800 44 $5,200 $650 136.8%Litelift Pro $655 8 $5,240 25 $2,480 $310 47.3%Litelift Ladies $655 4 $2,620 40 $6,710 $1,678 256.1%Litelift Racer $795 3 $2,385 37 $5,900 $1,967 247.4%

Revenue as percent of Cost of Inventory

163.5%296.8%136.8%

47.3%256.1%247.4%

Total Rental Revenue

$6,375 $4,570 $5,200 $2,480 $6,710 $5,900

Cost of Current Inventory

$3,900 $1,540 $3,800 $5,240 $2,620 $2,385

3 Management decisions that can be made from this dataContinue purchasing Lite Lift Ladies -> Profit

Discontinue purchasing Lite lift Pro -> No profit

Sell bikes that are not turning into profit and reinvest the money into the business.

Resort Bicycle Rental

Bicycle Inventory ValuationThursday ,September 24, 2009

Make of Bike Bike CostNumber on Hand

Cost of Current Inventory Cost Per Rental

Number of Renatals

Total Rental Revenue

Revenue Per Bike

Revenue as percent of Cost of Inventory

Wonder Bike $325 12 $3,900 $75 85 $6,375 $531 163.5%

Wonder Bike II $385 4 $1,540 $134 34 $4,570 $1,143 296.8%

Wonder Bike Supreme $475 8 $3,800 $118 44 $5,200 $650 136.8%

Litelift Pro $655 8 $5,240 $99 25 $2,480 $310 47.3%

Litelift Ladies $655 4 $2,620 $168 40 $6,710 $1,678 256.1%

Litelift Racer $795 3 $2,385 $159 37 $5,900 $1,967 247.4%

Resort Bicycle RentalBicycle Inventory Valuation

Thursday ,September 24, 2009

Make of Bike Bike CostNumber on Hand

Cost of Current Inventory Cost Per Rental

Number of Renatals

Total Rental Revenue

Revenue Per Bike

Revenue as percent of Cost of Inventory

Wonder Bike $325 12 $3,900 $75 85 $6,375 $531 163.5%

Wonder Bike II $385 4 $1,540 $130 34 $4,420 $1,105 287.0%

Wonder Bike Supreme $475 8 $3,800 $120 44 $5,280 $660 138.9%

Litelift Pro $655 8 $5,240 $90 25 $2,250 $281 42.9%

Litelift Ladies $655 4 $2,620 $170 40 $6,800 $1,700 259.5%

Litelift Racer $795 3 $2,385 $155 37 $5,735 $1,912 240.5%