Jennifer Job is considering opening her own business, Jenny's Jungle Gyms. She has gathered information on the

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Jennifer Job is considering opening her own business, Jenny's Jungle Gyms. She has gathered information on the assembly and installation of jungle gyms for nursery schools, elementary schools, parks and residences. Jenny would order mix and match parts for custom designs, assemble and install the gyms for the customer. Jenny believes that, with a $30,000 vehicle with a $5,000 salvage value after 10 years and $5,000 in assembly tools and equipment (a 10-year life); she will be able to generate $70,000 a year in sales. Her other projections include an initial inventory of $15,000, assembly training for $2,500, cost of goods sold (COGS) approximately $35,000, selling expenses of $9,000 and general and administrative expenses of $7,000. She expects to pay 25% of her earnings in taxes and must earn a 15% return. Is this a profitable business under these conditions?


Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Cost Accounting A Managerial Emphasis

ISBN: 978-0133392883

6th Canadian edition

Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ

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