Question Description:
I have attached my calculations report and for the second time have done it incorrectly. Please use my instructor’s feedback to correct this please.
Instructor feedback: You should use the answers from #2 to find the Mean, Median, and Mode. You used improper numbers in this latest submission like you did in your previous submission. Please use the answers from #2. Once you have revised the mean, median, and mode use the updated values to revise #8, #10, and #11.
All-Store Calculations and Report
Note: Complete this worksheet by replacing the bracketed phrases in the response boxes with the relevant information.
Name: James Griffin
You need to analyze three areas of the All-Store business: declining sales, reducing staffing, and purchasing the building. Before you start, read all of the All-Store company documents in the “Supporting Materials” section. These will have useful information that will help you complete your project.
Note: You can use a calculator to complete the calculations. Make sure to show and check all of your work.
Part 1: Your Calculations
Declining Sales
The general manager wants to know what the impact will be on the business if sales continue to decline at the current rate and no action is taken. This can be broken down into two questions:
- How long will it be before All-Store starts operating at a loss?
- How long will it be before All-Store goes bankrupt?
How Long Before All-Store Starts Operating at a Loss?
When a company makes less money than it spends, this is referred to as operating at a loss. Another way to express this is “the net profit equals zero.”
When will All-Store’s monthly profit equal zero? Although there’s no precise answer to this question, since the future is unpredictable, you can estimate based on some available data. In the following steps, you will estimate the monthly drop in profits. Then, you’ll formulate a projection to determine when All-Store would be operating at a loss.
1. Monthly Net Profit
List each month’s net profit in the following response box.
| January: $135,970.66 February: $129,832.81 March: $120,896.73 April: $108,024.43 May: $109,442.14 June: $93,514.22 |
2. Difference between Monthly Net Profits
Calculate the difference between each month’s net profits. For example, subtract January’s profit from February’s profit. Then subtract February’s profit from March’s profit. Continue this process for each month.
| February – January: -$6,137.85 March – February: -$8,936.08 April – March: -$12,872.30 May – April: $1,417.71 June – May: -$15,927.92 |
3. Profit Drop
Determine how much profits will drop in the following months. You’ll need to estimate based on all of the previous numbers. One way to do this is by choosing a number that represents something close to the middle of the values, or a measure of central tendency. Mean, median, and mode are three different measures of central tendency. Calculate each measure in the following response box.
4. To calculate the mean (average):
- Add all of the numbers in the series together.
- Divide them by the quantity of numbers added.
- Note: You may need to round up or down to the nearest cent.
5. To calculate the median (middle):
- List all of the numbers in the series in order (low to high, or high to low).
- Choose the one in the middle of the list.
6. To calculate the mode (most frequent):
- List all of the numbers in order (from lowest to highest or highest to lowest).
- Choose the number that appears the most often. If no numbers repeat in a series, then there is no mode.
| Mean: (135,970.66 + 129,832.81 + 120,896.73 + 108,024.43 + 109,442.14 + 93,514.22 )/ 6 = $116,280.17 Median: Since the data set consists of 6 numbers, the median value would be between 3 and 4 in the series, which is calculated by taking the sum and dividing it by 2. So, in this case, the median is equal to (109,442.14 + 120,896.73 ) / 2 = $115,169.44. Mode: No mode |
7. Mode of Central Tendency Used to Predict the Upcoming Months
- Which value(s) will you use to make your projections? Why?
- Is there value in showing more than one projection in your report? Why or why not?
| I will use the value of the mean (average) as the mode of central tendency to make my projections. This is because it is a model of my entire data set and is the value that is most common. It is the value that produces the lowest amount of error from all other values in the data set, therefore making it valuable in showing more than one projection. In addition, the mean is calculated where the sum of the deviations of each value from the mean is zero. |
8. Projection
Now that you’ve chosen a way (or ways) to estimate, it’s time to project the month. To do this:
- Divide the last number in the series (the net profit from June) by the measures of central tendency you calculated in question 3.
- If there is a decimal in your result, round down to the nearest month.
| $93,514.22 / $116,280.17 = 0.804 ≈ 1 month (calculated using the mean) $93,514.22 / $115,169.44 = 0.812 ≈ 1 month (calculated using the median) |
How Long Before All-Store Goes Bankrupt?
Bankruptcy is when a person or company runs out of money and cannot afford to pay the bills. It can also refer to the legal processes involved in dealing with this situation. For All-Store, bankruptcy could include missing payments on anything from rent to payroll. In this section, you will use your estimate for the monthly drop in profits, which you already calculated, to project when this will occur.
9. All-Store Savings
Find the current amount of funds that All-Store has in savings. Read the company documents in the “Supporting Materials” section to learn this information.
| The current amount of funds that All-Store has in savings is $50,546.43. |
10. How Long All-Store Can Operate at a Loss
Although the company will be operating at a loss, All-Store has some money in savings that will allow it to pay for expenses for a time. In the response box, determine this time in months. To do this:
- Add the amount in savings to the net profit from June.
- Divide by the number(s) you determined above (mean, median, mode).
- If there is a decimal in your result, round down.
| ($93,514.22 + $50,546.43) / $116,280.17 = 1.24 ≈ 1 month (calculated using the mean) ($93,514.22 + $50,546.43) / $115,169.44 = 1.25 ≈ 1 month (calculated using the median) |
11. Summary
Reflect on the meaning of your calculations. Consider the following questions:
- What do you think the results of your calculations will mean for the company?
- What specific actions would you recommend based on all of the available information? For example, what is a specific way for the company to cut costs?
| My recommendation for the company is that they should minimize the expenses used on advertisements and insurance covers, since they only have a month’s worth of expenses saved up (shown in step 10 above using both mean and median values). The company spent $16,217.13 in advertising, which is absurdly high given the level of sales being experienced within the current age. The development of e-commerce business should be encouraged as technology continues to advance, which would also decrease advertising costs significantly. Installation of security systems and other important aspects of a building can reduce insurance as a whole by attracting discounts from the companies being involved. |
Skeleton Crew
The general manager wants to know what All-Store’s options are for reducing staffing if the business needs to cut back on payroll. You will break this question down into three smaller questions:
- How many peak and nonpeak hours are there during the week? Peak refers to busy times and nonpeak refers to less busy times.
- What is the minimum labor cost per week?
- What is the minimum number of people needed during store hours?
How Many Peak and Nonpeak Hours Are There during the Week?
12. Store Hours
How many total hours is the store open each day? This is a small piece of the larger problem, but the results can inform the rest of your calculations.
| The store is open for 15 hours each day from Monday to Saturday, and is open for 13 hours on Sunday. The store is open from 7 am to 10 pm on Mondays to Saturdays, and is open from 9 am to 10 pm on Sundays. |
13. Peak Hours
What are the total peak hours for a week? To do this, add the peak hours for each day together.
| In a week, there are 20 total peak hours. On Monday, Thursday, and Friday, the store has peak hours from 5 pm to 7 pm. On Saturday, the store has peak hours from 10 am to 7 pm, and from 12 pm to 5 pm on Sunday. |
14. Nonpeak Hours
What are the total nonpeak hours for the week? To do this, subtract the peak hours from the total hours.
| There are 83 total non-peak hours for the store during the week. |
What Is the Minimum Labor Cost Per Week?
The general manager provided you with the hourly wages for sales associates and managers, as well as how many of each type of staff are needed during peak and nonpeak hours. To determine the minimum labor costs per week, you will need to use the total hours that you calculated in the previous section.
15. Minimum Sales Associate Hours
What is the minimum number of sales associate hours needed each week? To calculate this:
- Multiply the number of sales associates needed during peak times by the number of peak hours.
- Multiply the number of sales associates needed during nonpeak times by the number of nonpeak hours.
- Add those two numbers together.
| Sales associate peak hours: 10 x 20 = 200 Sales associate non-peak hours: 6 x 83 = 498 The minimum number of sales associate hours needed each week is 698 hours. |
16. Minimum Manager Hours
What is the minimum number of manager hours needed each week? To calculate this:
- Multiply the number of managers needed during peak times by the number of peak hours.
- Multiply the number of managers needed during nonpeak times by the number of nonpeak hours.
- Add those two numbers together.
| Manager peak hours: 2 x 20 = 40 Manager non-peak hours: 1 x 83 = 83 The minimum number of manager hours needed each week is 123 hours. |
17. Total Labor Costs Per Week
What is the minimum total labor cost per week? To calculate this:
- Multiply the number of sales associate hours by the sales associate hourly labor cost.
- Multiply the number of manager hours by the manager hourly labor cost.
- Add those two numbers together.
| 698 x $12.50 = $8725 123 x $20 = $2460 The minimum total labor costs per week is equal to $11,185. |
How Many Staff Are Required to Ensure Continuous Coverage?
18. Minimum Number of Sales Associates
Calculate the minimum number of sales associates by dividing the number of total hours needed by the number of hours per week that a sales associate may work.
| 698 / 30 = 23.2666667 The minimum number of sales associates is equal to 23. |
19. Reflect on Your Answer to Question 18
If your result was a decimal, will you round up or down in your report? Why?
| The answer above is indeed a decimal, and I would round down to the nearest whole number in order to keep labor costs down, because the numbers of sales associates must be a counting number or zero. |
20. Calculate the Minimum Number of Managers
To do this, divide the number of total hours needed by the number of hours per week that a manager may work.
| 123 / 40 = 3.075 The minimum number of managers is equal to 3. |
21. Reflect on Your Answer to Question 20
If your result was a decimal, will you round up or down in your report? Why?
| The answer above was a decimal, and I would round down to the nearest whole number in the report. Also, I would round down a manager’s full-time work schedule, unlike the workers who work part-time, because the number of managers must be a counting number or zero. |
22. Summary
Summarize what you think the results of your calculations will mean for All-Store.
- What specific actions would you recommend based on all of the available information? For example, what are some options for future staffing, should sales continue to decline?
| Staff minimization will help in reducing the costs associated with staffing. Doing away with the compensation of workers would be ideal for this, but the alleviation of the compensation should be announced beforehand in order to be the most effective. Reduction of workers’ wages can also assist in reducing staffing costs. For future staffing, I would recommend offering incentives in spite of reduced wages, in order to motivate workers into achieving new goals in the workplace. |
Rent vs. Buy
The building’s owner approached the general manager about her interest in purchasing the building. Your manager wants to know what would be the immediate financial impact of purchasing the building. You will break this question down into the following questions:
- What is the difference in monthly cost between renting and buying?
- Given the down payment required, how many months would it be before the purchase paid for itself?
What Is the Difference in Monthly Cost between Renting and Buying?
23. Monthly Cost of Rent
What is the monthly cost of rent? Review the profit and loss statement or the June bank account statement for this information.
| The monthly cost of rent is $5,000.00, as shown from the profit and loss statement. |
24. Total Monthly Payment of the Loan
What is the total monthly payment of the loan? Review the loan estimate document.
| The total monthly payment of the loan is $3,480.12. |
25. Cheaper Monthly Payment
Find the difference between the monthly rent and the monthly loan payment, and identify which one is the cheaper monthly payment.
| The monthly loan payment is $1,519.88 cheaper than the monthly rent payment. |
Given the Down Payment Required, How Many Months Would It Be before the Purchase Paid for Itself?
People say that something “has paid for itself” when the financial benefits over time equal the initial investment. In this section, you will calculate how many years it will be before All-Store saves money.
26. Months Until It Pays for Itself
Divide the initial investment (i.e., the down payment) by the amount saved each month (which you calculated above). The result will be in months. If it is a decimal, round up.
| 50,000 / 1,519.88 = 32.897 It will take about 33 months for the initial investment to pay for itself. |
27. Convert to Years
What is this estimate in years?
| 33 / 12 = 2.75 33 months is equal to 2.75 years. |
28. Reflect
Reflect on your answer. Address the following questions in your response:
- Is the answer to the previous question more or less than the term of the loan?
- What would be the immediate impact to All-Store’s savings?
| The loan term is 5 years, and the initial investment could potentially pay for itself in 2.75 years, which is considerably less than the term of the loan. This would allow All-Store to save money for 2.25 years longer than it was previously budgeting for. |
29. Summary
Summarize what you think the results of your calculations will mean for the company. What specific actions would you recommend based on all of the available information? For example, is this a good time to buy? You will need to include this summary in your report and mention specific calculations to justify your recommendations.
| I would recommend that the company buys the property and uses its monthly savings to pay off the principle of the total monthly payment. This will help them pay off the property faster and, as a result, allow them to save money for 2.25 years additionally than the previous option exercised. |
Part 2: Your Report to Your Manager
Use the following template to write a report to your manager with your findings. Make sure to support your recommendations with qualitative evidence.
Declining Sales
Recommendations for Declining Sales (100–150 words)
Make your recommendations about the impact of All-Store’s declining sales. Use your response to question 8 in part one to help you get started. Your recommendations should be supported by detailed quantitative evidence.
| I would recommend enacting furloughs into All-Store’s sales department. This involves the creation of a policy that would require every employee to take unpaid leave for a given period of time in order to minimize the staffing costs, which should definitely be minimized as soon as possible. |
Analysis of Declining Sales (100–150 words)
Explain your use of mathematical expressions in solving problems. You may use text, images, or graphs.
| Throughout this assignment, I used parenthetical expressions, multiplication, division, addition, and subtraction in order to obtain my calculations. For example, to properly calculate the mean of a sample of data, you must add up all numbers in a data set and divide that total by the number of numbers within that set. |
Skeleton Crew
Recommendations for Skeleton Crew (100–150 words)
Make your recommendations about All-Store’s staffing. Use your response to question 19 in part one to help you get started. Your recommendations should be supported by detailed quantitative evidence.
| The company stores are open for 103 hours weekly, and the company requires a minimum of 3 full time working managers and 24 sales associates. Due to declining sales, staff minimization will help in reducing the costs associated with the staffing. Getting rid of the compensation of workers would be perfect in this scenario. |
Analysis of Skeleton Crew (100–150 words)
Explain your use of mathematical expressions in solving problems. You may use text, images, or graphs.
| For this section of the assignment, I used multiplication and division in order to calculate the minimum number of associates and managers needed on a given day of the week. For example, I divided 698 by 30 to calculate the number of sales associates needed every day of the week, which is equal to 23. |
Rent vs. Buy
Recommendations for Rent vs. Buy (100–150 words)
Make your recommendations about All-Store purchasing the building or continuing to rent. Use your response to question 26 in part one to help you get started. Your recommendations should be supported by detailed quantitative evidence.
| It makes the most sense for All-Store to purchase the building and use its monthly savings to pay off the monthly installments. Since it would take about 33 months for the initial investment to pay off itself, the company could be saving money during this time period and use that to pay off the principal in future payments. 2.25 years would be saved in doing so, since that is the approximate amount of time that is needed to pay off the property. |
Analysis of Rent vs. Buy (100–150 words)
Explain your use of mathematical expressions in solving problems. You may use text, images, or graphs.
| For this section of the assignment, I used division and subtraction to calculate some of the major values needed. For example, in order to calculate the amount of months until the initial investment pays for itself, I divided 50,000 by 1,519.88 which is equal to approximately 33 months. This value is significant in determining whether or not All-Store should purchase the building or continue to rent it. |
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