Assignment:
Start Up and Operational Budgets: Prepare a projected Capital Budget as well as a Revenue and Expense Budget for start-up (the first year of operation). Using the same or altered assumptions, prepare a projected Revenue and Expense Budget for the second year of operation.
Organization X has its own facility where medical waste gets destroyed. The transport company delivers the waste to the facility from all of the affiliated hospitals.
Current Cost of Business:
Put all of the costs where they belong: Either in the Capital Budget or in Operating Budget.
Salaries of 6 employees: $140,000
Water $5,000
Electricity $24,000
Maintenance of the Schreder $30,000
Gloves $900
Bags $21,200
Waste Disposal (Waste sent to a landfill) $90,000
Transport Company Costs $90,000
Total Revenue $10,000 (the hospital only makes a small revenue)
Total Cost 311,000
Cost of Business with buying a truck:
Put the following costs either in the capital budget or operating budget for first two years please.
Salaries of 6 employees: $140,000
Water $5,000
Electricity $24,000
Maintenance of the Schreder $30,000
Gloves $900
Bags $21,200
Waste Disposal (Waste sent to a landfill) $90,000
Cost of the Truck $40,000
Miscellaneous Cost (for fixing the truck) $6,000
License $500
Insurance $6,000
Fuel $5,000
Transport Company Cost is eliminated
However, Organization X will not save money in the first year because it will have to pay $40,000 for the new truck.
Cost of an additional employee $30,000
Employee Benefits $7,200
Cost of new Cans required for business $12,800
But, the organization will save money in the second year because the truck will be paid for in the first year. So, the truck will help the hospital save money and bring in more revenue.
Additional Revenue with the truck:
Make a table to show how much revenue would come in for the first two years.
Organization X destroys 40,000 pounds of medical waste per week. It can destroy another 6,000 per week.
Lets say that in the first year of business with the truck, the organization is able to get enough customers to destroy 3,000 of the unused capacity. That would be a revenue of $40,000.
You can call that line something like this: Earning from future possible business in the area
Lets say that the organization destroys 6,000 pounds of medical waste in the second year. That would be a revenue of $80,000.
Show that buying the truck will help the organization save some money and make additional revenue.
Please write one paragraph explaining why the organization should buy the truck or stay with the transport company based on the numbers provided.