Question

QuietClean Inc. is an office building housekeeping contractor that employs mostly migrant labor to clean small office buildings. Most of the work is second shift after the office workers of the firm's clients have gone home for the day. Generally the professional housekeeper(s) arrive driving a van that also has the material and equipment for cleaning at 5:00 and spend the next seven hours emptying waste baskets, vacuuming, cleaning the lavatories, mopping the floors, sponging off desks, etc. The following is some financial information regarding the business: Revenue Depreciation Selling Expense 6,000,000 360,000 300,000 Rent for the Headquarters Liability Insurance Cleaning Staff Wages 160,000 60,000 2,400,000 Fuel, Tires etc. for the Van 100,000 Interest Expense Vacuum bags, sponges and 129,600 Heating and Electricity Chemical Cleaning Agents Staff and Admin Salaries 160,000 other short-lived supplies 600,000 Profit taxes 600,000 Assets 300,000 300,000 1,800,000 Note: On the exam this would be a question to be answered in Hard Copy Question 33 (1 point) The cost of goods for this firm is,

Answer 1

Answer 33

Cost of goods =opening stock + purchases + direct labor + direct expenses - closing stock

Pariculars	Amount $
Fuel tires etc	100,000
Heating and electricity	160,000
cleaning staff wages	2,400,000
chemical cleaning agents	600,000
Less:- vacuum bags and other short supplies	(300,000)
cost of goods	2,960,000

Answer 34

Gross profit = Revenue - cost of goods

gross profit=6,000,000 - 2,960,000 = 3,040,000.

Answer 35

gross profit margin = gross profit / sales revenue

gross profit margin = 3,040,000 / 6,000,000 =0.51

Answer 36

SG&A

Items	Amount $
Depreciation	360,000
Selling expenses	300,000
Staff and adm salaries	600,000
Rent	160,000
Liability insurance	60,000
Interest expenses	129,600
Total	1,609,600

Answer 37

operating profit or EBIT = Gross profit - operating expenses(other than interest and tax) = 1,560,000

Answer 38

operating profit margin = 1,560,000 / 6,000,000 = 0.26

Answer 39

non operating expenses

interest expenses = 129,600

taxes = 300,000