ZOOM For the purposes of this case, assume this is the spring of 2019. Based on...

 

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ZOOM For the purposes of this case, assume this is the spring of 2019. Based on your knowledge of managerial accounting, you were hired fora part-time job by Lizzo Gupta to provide her with financial advice in the operation of her limousine company. The L. Gupta Limousine Company operates a fleet of 10 limousines used for weddings, prom, and business events in Washington, D.C. Ms. Gupta charges customers a flat fee of $250 per car taken on contract plus an hourly fee of $80. Her income statement for May follows: Revenue (200 contracts $250) + (1,250 hours at $80 per hour) Operating Expenses. $150,000 Drivers wages and benefits (1,250 hours at $36 per hour) Depreciation on limousines Fuel costs (1,250 hours at $12.00 per hour) Maintenance 45,000 19,000 15,000 18,400 2,500 10,500 24,200 Liability and casualty insurance Advertising Administrative expenses Total expenses Operating Income 134,600 $ 15.400 All expenses are fixed, with the exception of driver wages and benefits and fuel costs, which are both variable per hour. During May, the company's limousines were fully booked. In June, Ms. Gupta expects that her limousine company will be operating near capacity Rhonda Khalifa, a prominent Washington socialite, has asked Gupta to bid on a large charity event she is hosting in late June. The limousine company Khalifa had hired has canceled at the last minute and she needs the service of five limousines for four hours. She will only hire L. Gupta Limousines if they take the entire job. Gupta checks her schedule and finds that she only has three limousines available that day. Gupta, however, could accept the job if she rents limousines from another company. If she were to rent limousines from another company, Gupta would still need to pay for fuel and driver wages for these cars for the Khalifa business. Ms. Gupta has asked you to do some further analysis and to write her a memo letting her know how much she should be willing to pay for each limousine she rents from another company. In doing some further research you discover. 1. In order for L. Gupta Limousines to fulfill the Khalifa business, without renting additional limousines, she would have to (a) cancel two prom contracts each for one car for six hours, or (b) eancel one business event for three cars contracted for two hours each. 2. IfL. Gupta Limousines does not get the Khalifa business, the three limousines currently available would go unrented. Prepare a one page memo, possibly with attached appendices, presenting your analysis and recommendation Your recommendation should include (a) the most that Gupta should offer another company per limousine in order to maximize Gupta's short-term income and (b) some reasons why Gupta may wish to offer another limousıne company more than the amount you found in part (a) Assume that you wish to impress Ms. Gupta with your work and expect that she will be serving as a reference for future employment. ZOOM For the purposes of this case, assume this is the spring of 2019. Based on your knowledge of managerial accounting, you were hired fora part-time job by Lizzo Gupta to provide her with financial advice in the operation of her limousine company. The L. Gupta Limousine Company operates a fleet of 10 limousines used for weddings, prom, and business events in Washington, D.C. Ms. Gupta charges customers a flat fee of $250 per car taken on contract plus an hourly fee of $80. Her income statement for May follows: Revenue (200 contracts $250) + (1,250 hours at $80 per hour) Operating Expenses. $150,000 Drivers wages and benefits (1,250 hours at $36 per hour) Depreciation on limousines Fuel costs (1,250 hours at $12.00 per hour) Maintenance 45,000 19,000 15,000 18,400 2,500 10,500 24,200 Liability and casualty insurance Advertising Administrative expenses Total expenses Operating Income 134,600 $ 15.400 All expenses are fixed, with the exception of driver wages and benefits and fuel costs, which are both variable per hour. During May, the company's limousines were fully booked. In June, Ms. Gupta expects that her limousine company will be operating near capacity Rhonda Khalifa, a prominent Washington socialite, has asked Gupta to bid on a large charity event she is hosting in late June. The limousine company Khalifa had hired has canceled at the last minute and she needs the service of five limousines for four hours. She will only hire L. Gupta Limousines if they take the entire job. Gupta checks her schedule and finds that she only has three limousines available that day. Gupta, however, could accept the job if she rents limousines from another company. If she were to rent limousines from another company, Gupta would still need to pay for fuel and driver wages for these cars for the Khalifa business. Ms. Gupta has asked you to do some further analysis and to write her a memo letting her know how much she should be willing to pay for each limousine she rents from another company. In doing some further research you discover. 1. In order for L. Gupta Limousines to fulfill the Khalifa business, without renting additional limousines, she would have to (a) cancel two prom contracts each for one car for six hours, or (b) eancel one business event for three cars contracted for two hours each. 2. IfL. Gupta Limousines does not get the Khalifa business, the three limousines currently available would go unrented. Prepare a one page memo, possibly with attached appendices, presenting your analysis and recommendation Your recommendation should include (a) the most that Gupta should offer another company per limousine in order to maximize Gupta's short-term income and (b) some reasons why Gupta may wish to offer another limousıne company more than the amount you found in part (a) Assume that you wish to impress Ms. Gupta with your work and expect that she will be serving as a reference for future employment.

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