Caribbean Internet Café Case Analysis
Caribbean Internet Café case analysis:
David is required to manage start up costs of $1,573,000 and fixed monthly costs of $203,083.33 to invest in CIC venture. The managerial issue David is faced with is cost versus benefit, if the venture would be profitable for him and CIC and how long would it take him to recover all the startup investments.
To deal with this managerial issue, David has to consider three categories of costs: Start up costs required to be invested in the business, Fixed monthly costs that are to be bore as result of operations and variable costs, that result with every customer visit to the café. There is an assumption that loan from JTL in the startup is a 5 year loan with principal payable on maturity and 10% simple interest payable monthly. Also, part time students work for 15 hours and daily require two workers, hence monthly need 2 * 15 * 30 = 900 hours of work at $40 / hour. Fixed Costs | Part time Employee monthly salary | $ 36,000.00 | Manager monthly salary | $ 40,000.00 | Site lease cost - Monthly | $ 30,000.00 | telephone bills and utilities - Monthly | $ 15,000.00 | line lease - Monthly | $ 10,000.00 | Insuarance - monthly | $ 10,000.00 | Advertising - monthly | $ 10,000.00 | misc. monthly expense | $ 50,000.00 | Monthly Interest Payment for loan | $ 2,083.33 | Total | $ 203,083.33 | Variable costs / customer | | Drinks | $ 50.00 | food | $ 30.00 | Internet (40% surf) | $ 24.00 | Total | $ 104.00 | Startup costs | general equipment | $ 573,250.00 | hardware | $ 392,000.00 | Software | $ 15,750.00 | Furniture | $ 330,000.00 | Other | $ 115,000.00 | Initial deposit for utilities | $ 7,000.00 | Initial advertising before opening | $ 20,000.00 | Upfront legal costs before
David is required to manage start up costs of $1,573,000 and fixed monthly costs of $203,083.33 to invest in CIC venture. The managerial issue David is faced with is cost versus benefit, if the venture would be profitable for him and CIC and how long would it take him to recover all the startup investments.
To deal with this managerial issue, David has to consider three categories of costs: Start up costs required to be invested in the business, Fixed monthly costs that are to be bore as result of operations and variable costs, that result with every customer visit to the café. There is an assumption that loan from JTL in the startup is a 5 year loan with principal payable on maturity and 10% simple interest payable monthly. Also, part time students work for 15 hours and daily require two workers, hence monthly need 2 * 15 * 30 = 900 hours of work at $40 / hour. Fixed Costs | Part time Employee monthly salary | $ 36,000.00 | Manager monthly salary | $ 40,000.00 | Site lease cost - Monthly | $ 30,000.00 | telephone bills and utilities - Monthly | $ 15,000.00 | line lease - Monthly | $ 10,000.00 | Insuarance - monthly | $ 10,000.00 | Advertising - monthly | $ 10,000.00 | misc. monthly expense | $ 50,000.00 | Monthly Interest Payment for loan | $ 2,083.33 | Total | $ 203,083.33 | Variable costs / customer | | Drinks | $ 50.00 | food | $ 30.00 | Internet (40% surf) | $ 24.00 | Total | $ 104.00 | Startup costs | general equipment | $ 573,250.00 | hardware | $ 392,000.00 | Software | $ 15,750.00 | Furniture | $ 330,000.00 | Other | $ 115,000.00 | Initial deposit for utilities | $ 7,000.00 | Initial advertising before opening | $ 20,000.00 | Upfront legal costs before