Business Introduction Letter Sample by whv97216

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Business Introduction Letter Sample document sample

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									Thank you for participating in "The Budget Process" Webinar

This download contains three files, the first is this introduction letter. The secon
profit and loss statement that your bookkeeper can use as a guide to enter your f
is a sample of "jost costing" for both estimating and tracking each job cost.

PLEASE, remember that it is very important to separate "service" from "construct
using the "Value Marker" system. If you bunch the two together the "Value Mark

The Profit and Loss file also contains extensions for adding technicians.

I recommend that you have someone familiar with excel redesign the formulas to
This file is for illustration only.

Thanks again for participating in the Webinar.

Skip Snyder
uction letter. The second is a sample
s a guide to enter your financials. The third
 ng each job cost.

service" from "construction" when
ogether the "Value Marker" is useless.

g technicians.

edesign the formulas to suit your needs.
Handout # 1                                                                                                   Current Year                  Budget Year
SAMPLE COMPANY INC                                      Percent            Number         Costs per           Actual Tech. Labor Costs      Actual Tech. Labor Costs     What to expect             What to expect           Budget Numbers        Budget Cost           Number         Recast
INCOME STATEMENT                                        Of                 Of             Technician          Plus Matching, Medical        Plus Matching, Medical       from Management            from Mangement           For new Fiscal        Per                   Of             Budget
The Budget Process - Webinar 10/22/08                   Sales              Technicians    Current Year        Truck, tools misc….           Truck, tools misc….          in guidance on             in guidance on           Year:                 Technician            Technicians    Year
Number of Technicians                              10                      Current                            For Prior Year                Budget Year                  costs of doing             cost of doing                                                        Budget         With Added
Number of Overhead                                  3                      Year                                                                                          business                   business for             10 Technicians        10 Technicians        Year           Technicians
Number of Technicians Next Year                    12                                                                                                                                               budget year
INCOME:
LABOR                                   $1,200,000.00             0.5455             10     $120,000.00       Labor Sales Per Tech.                                                                                             $1,260,000.00            $126,000.00               12          $1,512,000.00
MATERIAL                                  $900,000.00             0.4091             10      $90,000.00       Material Sales Per Tech.                                                                                               $945,000.00          $94,500.00               12          $1,134,000.00
CREDIT INVOICES                                 $0.00             0.0000             10               $0.00                                                                                                                                $0.00                 $0.00             12                  $0.00
SUBCONTRACT                                $50,000.00             0.0227             10        $5,000.00                                                                                                                              $52,500.00           $5,250.00               12             $63,000.00
PARTS SALES                                $50,000.00             0.0227             10        $5,000.00                                                                                                                              $52,500.00           $5,250.00               12             $63,000.00

TOTAL SALES                             $2,200,000.00             1.0000             10     $220,000.00       Gross Sales Per Tech.                                                 $2,200,000.00            $2,310,000.00      $2,310,000.00            $231,000.00               12          $2,772,000.00

NET SALES                               $2,200,000.00                                10     $220,000.00                                                                                                                         $2,310,000.00            $231,000.00               12          $2,772,000.00

COST OF GOOD SOLD:
LABOR                                     $401,000.00             0.1823             10      $40,100.00                        $40,100.00                   $42,105.00                $42,105.00               $42,105.00            $421,050.00          $42,105.00               12            $505,260.00
MATERIAL                                  $300,000.00             0.1364             10      $30,000.00                                                                                                                              $330,000.00          $33,000.00               12            $396,000.00
Materials - Copper/Precious               $200,000.00             0.0909             10      $20,000.00                                                                                                                              $250,000.00          $25,000.00               12            $300,000.00
DISCOUNTS                                  -$1,000.00           -0.0005              10         -$100.00                                                                                                                              -$1,050.00            -$105.00               12             -$1,260.00
SUBCONTRACT                                $45,000.00             0.0205             10        $4,500.00                                                                                                                              $47,250.00           $4,725.00               12             $56,700.00
WIP-ADJSUTMENT                            $35,000.00            0.0159               10       $3,500.00                                                                                                                               $36,750.00           $3,675.00               12             $44,100.00

TOTAL COST OF GOODS SOLD                 $980,000.00              0.4455             10      $98,000.00                                                                              $980,000.00             $1,029,000.00      $1,029,000.00            $102,900.00               12          $1,234,800.00

GROSS PROFIT                            $1,220,000.00             0.5545             10     $122,000.00                                                                                                                         $1,281,000.00            $128,100.00               12      $1,537,200.00
                                                                                                                                                                                                                                                                                        Above the Line
General & Administrative Exp.
                                                                                                                                                                                                                                                                                        Below the Line
AD/PROMOTIONS                              $16,000.00             0.0073             10        $1,600.00                                                                                                                              $16,800.00           $1,680.00               12          $20,160.00
NATE CERTIFICATION                          $1,500.00             0.0007             10         $150.00                                                                                                                                $1,575.00             $157.50               12           $1,890.00
AMORT LEASEHOLD IMPVT                      $16,000.00             0.0073             10        $1,600.00                                                                                                                              $16,800.00           $1,680.00               12          $20,160.00
AUTOMOBILE EXPENSE                         $10,000.00             0.0045             13         $769.23                           $769.23                    $1,100.00                $10,000.00               $11,000.00             $11,000.00           $1,100.00               15          $16,500.00
AUTOMOBILE LEASE                           $21,000.00             0.0095             10        $2,100.00                                                                                                                              $22,050.00           $2,205.00               12          $26,460.00
AUTO-REPAIRS & MAINT                       $33,000.00             0.0150             13        $2,538.46                        $2,538.46                    $3,465.00                $33,000.00               $34,650.00             $34,650.00           $3,465.00               15          $51,975.00
BAD DEBTS                                     $500.00             0.0002             10           $50.00                                                                                                                                $525.00                 $52.50             12             $630.00
COMMISSIONS                                 $7,500.00             0.0034             10         $750.00                                                                                                                                $7,875.00             $787.50               12           $9,450.00
COMMUNICATION-CELLAR                       $15,000.00             0.0068             13        $1,153.85                        $1,153.85                    $1,575.00                $15,000.00               $15,750.00             $15,750.00           $1,575.00               15          $23,625.00
COMPUTER                                    $3,500.00             0.0016             10         $350.00                                                                                                                                $3,675.00             $367.50               12           $4,410.00
CONTRIBUTIONS                                 $500.00             0.0002             10           $50.00                                                                                                                                $525.00                 $52.50             12             $630.00
CONFERENCE/MEETINGS                         $3,500.00             0.0016             10         $350.00                                                                                                                                $3,675.00             $367.50               12           $4,410.00
DEPRECIATION                               $16,000.00             0.0073             13        $1,230.77                        $1,230.77                    $1,680.00                                                                $16,800.00           $1,680.00               15          $25,200.00
DUES AND SUBSCRIPTIONS                      $1,000.00             0.0005             10         $100.00                                                                                                                                $1,050.00             $105.00               12           $1,260.00
ENTERTAINTMENT                              $5,000.00             0.0023             10         $500.00                                                                                                                                $5,250.00             $525.00               12           $6,300.00
INTEREST                                      $100.00             0.0000             10           $10.00                                                                                                                                $105.00                 $10.50             12             $126.00
INSURANCE                                  $65,000.00             0.0295             13        $5,000.00                        $5,000.00                    $7,150.00                $65,000.00               $71,500.00             $71,500.00           $7,150.00               15        $107,250.00
INURANCE GROUP                             $40,000.00             0.0182             13        $3,076.92                        $3,076.92                    $4,400.00                                                                $44,000.00           $4,400.00               15          $66,000.00
ACCOUNTING                                 $15,000.00             0.0068             10        $1,500.00                                                                                                                              $15,750.00           $1,575.00               12          $18,900.00
LEGAL                                       $5,000.00             0.0023             10         $500.00                                                                                                                                $5,250.00             $525.00               12           $6,300.00
LICENSE (CONTRACTOR)                        $1,000.00             0.0005             10         $100.00                                                                                                                                $1,050.00             $105.00               12           $1,260.00
MAINTENANCE AND REPAIRS                    $12,000.00             0.0055             13         $923.08                           $923.08                    $1,260.00                                                                $12,600.00           $1,260.00               15          $18,900.00
MISCELLANEOUS                               $1,000.00             0.0005             10         $100.00                                                                                                                                $1,050.00             $105.00               12           $1,260.00
OFFICE EXPENSE                             $40,000.00             0.0182             10        $4,000.00                        $2,000.00                                                                                             $42,000.00           $4,200.00               12          $50,400.00
OFFICE SALARIES                           $100,000.00             0.0455             10      $10,000.00                                                                                                                              $105,000.00          $10,500.00               12        $126,000.00
OFFICER SALARIES                         $300,000.00              0.1364             10      $30,000.00                                                                                                                              $315,000.00          $31,500.00               12        $378,000.00
PENSION                                    $15,000.00             0.0068             10        $1,500.00                                                                                                                              $15,750.00           $1,575.00               12          $18,900.00
PERMITS                                       $500.00             0.0002             10           $50.00                                                                                                                                $525.00                 $52.50             12             $630.00
PLANS/SPECIFICATIONS                          $500.00             0.0002             10           $50.00                                                                                                                                $525.00                 $52.50             12             $630.00
RENT                                       $65,000.00             0.0295             10        $6,500.00                                                                                                                              $68,250.00           $6,825.00               12          $81,900.00
SALES SALARIES                             $90,000.00             0.0409             10        $9,000.00                                                                                                                              $94,500.00           $9,450.00               12        $113,400.00
TAXES & LICENSES                           $15,000.00             0.0068             10        $1,500.00                                                                                                                              $15,750.00           $1,575.00               12          $18,900.00
TAXES-PHILA                                 $1,200.00             0.0005             10         $120.00                           $120.00                      $126.00                                                                 $1,260.00             $126.00               12           $1,512.00
TAXES-CAPITAL STOCK                           $500.00             0.0002             10           $50.00                                                                                                                                $525.00                 $52.50             12             $630.00
TAXES-FICA                                 $50,000.00             0.0227             13        $3,846.15                        $3,846.15                    $5,250.00                                                                $52,500.00           $5,250.00               15          $78,750.00
TAXES-PA UC                                 $6,500.00             0.0030             10         $650.00                           $650.00                      $682.50                                                                 $6,825.00             $682.50               12           $8,190.00
TAXES-FED UC                                  $100.00             0.0000             10           $10.00                                                                                                                                $105.00                 $10.50             12             $126.00
TELEPHONE                                  $14,000.00             0.0064             13        $1,076.92                        $1,076.92                    $1,470.00                                                                $14,700.00           $1,470.00               15          $22,050.00
TRAVEL                                      $1,500.00             0.0007             10         $150.00                                                                                                                                $1,575.00             $157.50               12           $1,890.00
UTILITIES                                  $15,000.00             0.0068             10        $1,500.00                                                                                                                              $15,750.00           $1,575.00               12          $18,900.00

Sub total                                                                                                                                                                            $123,000.00              $132,900.00                  $0.00          $105,984.50              12          $1,271,814.00

Other Gen/Admin Expenses                                                                                                                                                                                                                   $0.00                 $0.00             12                  $0.00

TOTAL GEN'L & ADMIN EXPS                $1,003,900.00           0.4563               10    $100,390.00                         $22,385.38                  $28,158.50                $123,000.00            $132,900.00        $1,054,095.00             $105,409.50               12      $1,264,914.00

INTEREST INCOME                            -$1,200.00           -0.0005              10         -$120.00                                                                                                                              -$1,260.00            -$126.00               12             -$1,512.00
INTEREST INCOME-INDIVIDUAL                 -$2,200.00           -0.0010              10         -$220.00                                                                                                                              -$2,310.00            -$231.00               12             -$2,772.00
TOTAL OTHER INCOME (EXPS)                  -$3,400.00           -0.0015              10         -$340.00                                                                                                                              -$3,570.00            -$357.00               12             -$4,284.00
PA CORP INC TAX                            $12,000.00             0.0055             10        $1,200.00                                                                                                                              $12,600.00           $1,260.00               12             $15,120.00
RED COR INC TAX                            $20,000.00             0.0091             10        $2,000.00                                                                                                                              $21,000.00           $2,100.00               12             $25,200.00
Sub Total                                  $32,000.00             0.0145             10        $3,200.00                                                                                                                             $33,600.00            $3,360.00               12             $40,320.00

TOTAL EXPENSES                          $2,012,500.00             0.9148             10     $201,250.00                                                                                                                         $2,113,125.00            $211,312.50               12          $2,535,750.00

NET INCOME (LOSS)                        $187,500.00              0.0852             10      $18,750.00                                                                                                                          $196,875.00              $19,687.50               12          $236,250.00
Technician Costs:                                             Per Hr Costs.
Labor                                         $40,100.00               $25.25      COGS Labor                            COGS Labor                                           $26.51             $42,105.00             $0.00
Overhead                                      $22,385.38               $14.10      Line L73                              Overhead                                             $17.73             $28,158.50             $0.00
Total Technician Costs:                       $62,485.38               $39.35        $62,485.38                          Total cost per hr. labor                             $44.25              $70,263.50


Hourly Rate Determinant                   Weeks/days          Hours


Weeks                                                    52
Hours per Week                                           40
                                                       2080              2080
Less:
Vacation - Weeks                                          2                   80
Sick Days                                                 5                   40
Personal Days                                             3                   24
Holidays                                                  6                   48   New Years, Memorial Day, 4th of July, Labor Day, Thanksgiving, Christmas
Net billable hours per year                                              1888
Unapplied Hours                                                           300      Unapplied, hours tech. will not work for various reasons, seasonality, personal issues, underbid jobs etc…
Net billable hours per year                                             1588       Note: Also adjust for overtime billings


Applied/billable hrs Annually Per Tech.                                 1588                                                                                                                                                    Total Sales Budgeted Annually   $2,772,000.00
Sales per technician annually                $220,000.00        $220,000.00                                                                                                                                                     Sales per Tech Annually           $231,000.00
Sales per hour per technician
Includes labor & materials/Equip.                $138.54              $138.54      Effective hourly rates charged per technician for labor & Materials                                                                          Sales per hour per technician        $145.47

Cost Per Technician Per Hr.                                            $39.35      Effective cost "annually" for each Technician
Billable hours above……………                                               1,588      Effective hourly cost per technician


Overhead per Tech                                               $100,390.00                                              Below is projected value of expenses based on inflation shown on left                                       $105,409.50
Labor per Tech                                                   $40,100.00                                                                                                                                                           $42,105.00
Materials per Tech                                               $50,000.00                                              Total Gen-Admin Exp                           $1,059,845.00                                                  $58,000.00
Total per Tech                                                  $190,490.00                                              Less Hyper Inflation                            $126,500.00                                                 $205,514.50
Cost per Tech per hour                                                $119.96                                            Less Extreme Infation                                       0                                                   $129.42
                                                                                                                         Less Office & Sales Salaries                    $199,500.00
                                                                                                                         Owners Salary                                   $315,000.00
                                                                                                                         Total Gen-Admin Exp                             $418,845.00


Rate of Inflation                                      1.05              1.05      Excludes office and sales salaries                                                    $418,845.00


Rate of "Hyper" Inflation                               1.1               1.1                                                                                            $126,500.00


Rates of "Extreme" Hyper Inflation                     1.25              1.25      Value is listed "above the line" in COGS line item                                                0




END                                                                                                                                                                                                            Review Job Cost Formats:
Handout #2 - Job Costing
Job Costing:
Job Name:              Bell Tele 5250       New Burner                                                                                                      Per Pound
Level 1 Tech           Level 2 Tech         Work Description                                                  costs
                                                                             Equipment, Materials, sub contractors                   Sale Price             Freon Sale Price    Other:
                                                                                                                            $0.00                   $0.00
                8.00                  8.00 Removal                           Dumpster                                     $151.00                 $188.75
                4.00                  8.00 New Mounting Plate                OEM                                          $300.00                 $375.00
                4.00                  6.00 Refractory                        300 pounds plastic/mill board insulation     $550.00                 $687.50
                2.00                  2.00 New R10 - GO - 30                 New Dual Fuel Burner 100 H.P. Rating        $7,500.00            $9,375.00
                8.00                 16.00 Gas Piping                        30 ft. 3" sch 40 steel/nips/fittings         $140.00                 $280.00
                4.00                  8.00 Oil Piping                        misc 1" nipples/fittings/                    $200.00                 $250.00
                8.00                  8.00 Electrical                        Breakers/conduit/wire/id tags                $125.00                 $250.00
                2.00                  6.00 Barometric Damper/Gas             Stack Revamping/Damper 14" Dia               $150.00                 $187.50
                2.00                        Base of Chimney                  Diamon Drilling/access cap                   $400.00                 $500.00
                4.00                        Gas CO. Inspection -             Air test 24 Hrs - Special Gauge              $100.00                 $200.00
                8.00                        Start Up                                                                        $0.00                   $0.00
                8.00                  8.00 Warranty/One Year                 Labor budget for calls                       $100.00                 $200.00
                                                                                                                                                    $0.00
               62.00                70.00                                                                               $9,716.00         $12,493.75                    $0.00            $0.00


To convert this to a "job cost" report add one column to left for the dates




Handout #3 Mark Ups


                       Equipment Markup Table


                       Multiplier           for                              value


                                       4.5 <                                 $                              20.00
                                         4 <                                 $                              40.00
                                       3.5 <                                 $                              60.00
                                         3 <                                 $                              80.00
                                       2.5 <                                 $                            100.00
                                         2 <                                 $                            150.00
                                      1.25 <                                                                $1.25




                       Technician:          Mark Up Table:
                                            Hourly Rates:
                       Senior                                      $120.00
                       Junior                                       $85.00
                       Helper                                        $0.00
Handout # 4 Summary


Level 1 Tech:                 $7,440.00
Level 2 Tech:                 $5,950.00
Mat'ls Equip/Sub             $12,493.75
Freon:                              $0.00                       $25.00 Per Pound
Other:                                 0
Total Quote:                $25,883.75


Adjustment                       -3500 Need work, competition, degree of difficulty, new customer, equipment quotas


FINAL Quote                 $22,383.75


Goals/Objectives:


Total Labor Hours               132.00
Value Quoted                 $25,883.75
Effective Hr. Rate            $196.09


FINAL Quoted Rate             $169.57 Final Quote based on current work inventory, competition, need for new customers


Houry Rate Range     For Profits:


Low                           $138.54 Hourly rate from last year's financials - annual basis
Medium                        $159.32
High                          $180.10


Budgeted
Hourly Rate                                 Hourly rate for current year's budget.
END Job Cost




Handout #5 Service Costs:


Technician           Level                  Job Description             Materials used              Material Costs    Total Materials     Labor Hours          Labor Costs        Total Invoice Annualized


John Smith                             1 Cleaned Evap Coil              Cleaner                              $25.00             $100.00                 4.00            $120.00       $580.00      $145.00


Ray Isaac                              2 Replaced Filters                                      35            $8.00               $36.00                 8.00           $85.00 $1,345.00            $168.13


END Service Costs
Date:       Job 151
            Job Costing:
            Job Name:       Job 151           New Burner
Date:       Level 1 Tech    Level 2 Tech Work Description                                     Equipment, Materials, sub contractors


9/25/2008            6.00                5.50 Shutdown boiler, isolate
9/26/2008            8.00                     Remove old boiler, deliver new boiler           American Salvage
9/29/2008            8.00                8.00 Assembled boiler                                Boiler/Burner Costs??????
9/30/2008            8.00                8.00 Hydro with customer present                     Piping Costs??????
10/1/2008            8.00                8.00 installation                                    Misc Materials
10/2/2008            8.00                8.00 installation
10/3/2008            8.00                8.00 installation - check building for leaks???
10/6/2008            8.00                8.00 Finish Job




                                              Certified Welding


                   62.00             53.50




            Handout #3 Mark Ups


                            Equipment Markup Table


                            Multiplier        for                                             value


                                          4.5 <                                               $                     20.00
                                            4 <                                               $                     40.00
                                          3.5 <                                               $                     60.00
                                            3 <                                               $                     80.00
                                          2.5 <                                               $                    100.00
                                            2 <                                               $                    150.00
                                          1.1 <                                                                     $1.25




                            Technician:       Mark Up Table:
                                              Hourly Rates:
                            Senior                                                $120.00
                            Junior                                                $100.00
                            Helper                                                    $0.00
Handout # 4 Summary                                                       Job Quote:
                                                                          Progress Billings:
Level 1 Tech:        $7,440.00                                            First Invoice
Level 2 Tech:        $5,350.00                                            Second Invoice
Mat'ls Equip/Sub $14,787.50                                               Third Invoice
Freon:                   $0.00                                            Fourth Invoice
Other:                      0
Total Quote:                                                           Balance
                $27,577.50 This is the job cost to date based on parameters in section above.


Contract            $31,000.00
Less cost to date $27,577.50
Balance             $3,422.50 Current Status of Job



Estimated Labor            29 Hours available in funds                                          0
Costs Left



Adjustment                  0 Need work, competition, degree of difficulty, new customer, equipment quotas


                $27,577.50 Job Cost to date


Goals/Objectives:


Total Labor Hours      115.50
Value Quoted        $27,577.50
Effective Hr. Rate $238.77


FINAL Quoted Rate $238.77 Final Quote based on current work inventory, competition, need for new customers


             For
Houry Rate Range Profits:


Low                     $0.00 Hourly rate from last year's financials - annual basis
Medium                  $0.00
High                    $0.00


Budgeted
Hourly Rate                      Hourly rate for current year's budget.


END
                                                        Work in Progress Hours
                                                             9/30/2008
                                Per Pound
costs          Sale Price                   Other:
                                Freon Sale Price
                       $0.00                                    $6,180.00        51.5   Labor Thru 9/30/08
                       $0.00                                    $8,687.50   $8,687.50
   $1,500.00        $1,875.00                                 $14,867.50 Total Value as of 9/30/08
   $5,450.00        $6,812.50
                       $0.00                                   $20,000.00               Total Invoiced thru 9/30/08
                       $0.00                                   $14,867.50               Total Value as of 9/30/08
                       $0.00
                       $0.00                                   -$5,132.50               Net WIP Value as of 9/30/08
                       $0.00
                       $0.00
                       $0.00
                       $0.00
                       $0.00
                       $0.00
   $4,880.00        $6,100.00
                       $0.00
 $11,830.00     $14,787.50          $0.00       $0.00
               $31,000.00


               $10,000.00     9/26/2008
               $10,000.00     9/30/2008 Sam e-mailed
               $10,000.00    10/14/2008
                 $1,000.00   10/20/2008 Addition to contract


                    $0.00




er, equipment quotas




n, need for new customers
 iced thru 9/30/08
ue as of 9/30/08

Value as of 9/30/08

								
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