Assignment: Claire's Cuttery

Your Task

Using the information provided below, answer the series of

questions presented in Part I and Part II, below. When preparing

your written submission, include both your calculations and

your written analysis of the financial information. Download

Claire's Income Statement, which you'll need to complete this

assignment.

CLAIRE'S CUTTERY

Claire has always loved working with hair and beauty

products and has decided that she will quit her day job

and use the money her grandfather left her to start a salon.

All of her friends think it's a great idea, but her brother

cautions her about "leaping before she looks." She

decides that, before she begins, she will project her sales

for the first year to prove to her family that she has a

winning idea.

She sits down with paper and pencil and completes the

expense part of the Income Statement shown in the file

"Claire's Income Statement." But she needs help

projecting her sales, so using the following assumptions

and information, complete the "Income" section of the

Income Statement for her.

PART 1: Year 1 Projections

Her Business

Claire will have 3 stylists available. For planning

purposes, she assumes the following:

Each stylist can accommodate 6 customers per day.

The stylists each work 20 days per month.

Market Share

There are 8 other salons in the area that will compete for

business. Claire has talked to the local Chamber, and they

estimate that about 15,000 people now live in her town

She assumes that she can capture about 24% of the

market.

Sales Projections for Year 1

She assumes that the sales volume will be distributed as

follows:

January: 5% of annual sales

February: CLOSED

March: 10% of annual sales

April: 10% of annual sales

May: 10% of annual sales

June: 20% of annual sales

July: 5% of annual sales

August: 5% of annual sales

September: 10% of annual sales

October: 10% of annual sales

November: 5% of annual sales

December: 10% of annual sales

Part I: Questions

1. What is the maximum number of customers Claire can take

in any one month based on her assumptions, and assuming

a 30-day month? Is this enough to meet her market and

sales projections, or does she have to reduce the sales

projections because she runs out of capacity?

2. Can Claire accommodate 20% of her annual sales in one

month (June), given that she has only 3 stylists available?

How should she address this?

3. Will she show a profit or a loss for the business if she

achieves her sales figures as projected?