You have decided to start a new wood formwork installation company called “FORMWORK R US” (FRU)….

You have decided to start a new wood formwork installation company called “FORMWORK R US” (FRU). For this purpose, you made the following forecast, decisions, investments, and cost assumptions:

-According to your market evaluation, during the first year of operations (12 month period) FRU will have an average of 10 projects per month, each project will be bid (priced and charged to the client) at an average of $2,500.

-FRU yearly office expenses (i.e., utilities, equipment, insurance, phone/fax, etc) will total only $8,000 since FRU headquarters will be located in your home’s attic.

-FRU will have a total of 5 employees (all noted costs already include the corresponding “labor burden”):

• Your sister Emily, making $17,000/year (in salary) will manage the office and keep the accounting books.
• You, making $20,000/year (in salary) will “split” office work and field supervision responsibilities; that is, you work 25% as the assistant office business manager and 75% as a field project supervisor for all projects. When calculating the cost of supervision in any given project, you have determined that your hourly rate will be $65/day.
• Your field laborers (the ones actually doing the work) are Robbie Nails, Robert Lumber, and James Hummer; each of these field laborers are hourly employed at $8/hr (or $64/day). In any given year each of these field employees will make wages totaling approximately $15,000. Note: these field laborers, also called your field crew can install about 1,000sf of formwork per each working day, working 8 hours a day.

-FRU will pay for all costs for Emily’s Toyota Prius; in a year this cost will be $3,000. This car is used exclusively to run the office business.

-FRU will also cover the yearly costs for your black Nissan truck and your cell phone; these two items cost $5,000/year. You plan to use these two items to perform both, your work as an assistant office manager and as a field supervisor. For any given project, the “field” portion of these items will be charged to clients at $10/day.

-FRU will pay for the following items to cover the first year of operations:

• Miscellaneous safety gear for a total cost of $3,000 (for any given project, you plan to charge clients for these items at a rate of $15/day).
• Temporary sanitary facilities for a total cost of $2,000 (for any given project, you plan to charge clients for these items at a rate of $8/day).

1. What is FRU’s projected yearly Sales Revenue (in $)?

1. What is FRU’s Yearly Project Overhead Cost (PoOH), also called “General Conditions”) (In $)?

1. What is FRU’s Yearly Cost of Business (CoOH); (provide your answer In $ and as % of Revenue)?

1. What is the % of Company Overhead (Cost of Business) that would be added to each bid completed by FRU?