Question: Below is the most recent annual financial statement for Sxusem: Sxusem Inc. Statement of operations For the year ending December 31 Storefront Ice cream trucks

Below is the most recent annual financial statement for Sxusem: Sxusem Inc. Statement of operations For the year ending December 31 Storefront Ice cream trucks Total Sales $1,426,000 $ 940,000 $2,366,000 Variable expenses 713.000 470,000 1,183.000 Contribution margin 713,000 470,000 1,183,000 Advertising 25,000 2,000 27,000 Rent 150,000 150,000 Utilities 17,000 12,000 29,000 Salary and wages 350,000 135,000 485,000 Depreciation 55,000 24,000 79,000 Operating income 116,000 297,000 413,000 Taxes 29.000 74,250 103.250 Net income $ 87.000 $ 222,750 $ 309.750 In the event that the storefront location closes, the Kwarakwantes think that the equipment will be sold to a competitor for $20,000, net of taxes and disposal costs. The current lease includes two parking spots that are used by the ice cream trucks. Each spot would continue to be leased at a rate of $6,000 annually. The current advertising budget benefits both the storefront and the ice cream trucks. If the storefront is closed, the Kwarakwantes expect the ice cream trucks' advertising budget to be increased to $13,000. The Kwarakwantes would require that even with the closure, they maintain their current salary of $100,000 each. The other employees in the storefront would be laid off. Lastly, in the storefront location, each year they cater several events over the winter holiday season. This would continue with the use of the trucks, which are not normally in service at that time. The revenues on these sales are $250,000, and it is expected this will incur additional utilities of $500. The Kwarakwantes would like to understand the cash flow impact in the next five years if they choose to close the storefront. Your response should be no longer than half a page, excluding any work in Excel

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!