A business person is wanting to open Caribbean Internet Cafe in Kingston, Jamaica. He has accumulated information on all the significant expenses: hardware, rent, work, and so forth. He has additionally discovered an accomplice in the nearby phone organization, Jamaica Telecommunications Limited (JTL). JTL has given value and a long haul credit at positive interest rates. He is currently confronted with the undertaking of examining altered, variable and start-up expenses, commitment edge, and the idea of make back the initial investment to guide his choice.
· Identification of Start-up cost, Fixed Cost and Variable Cost
· Fixed Cost
· Variable Cost per Customer
· Calculation of Contribution Margin
· Breakeven Analysis
1. What managerial issues should David Grant consider before starting the Caribbean Internet Café?
2. Define the fixed, variable and start-up costs in this case.
3. What will be the costs for the very first customer?
4. What is the contribution margin per customer?
5. How many customer visits will CIC need in order for the café to break-even in the first year?
6. How many customer visits will CIC need in order for the café to break-even in year two? Should Grant proceed with the venture?
7. Should Grant proceed with the venture?