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linapril

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Julia Parsons runs a small business hiring out canoes and pedaloes (pedal

boats) in a seaside holiday resort during the summer months. The canoes and

pedaloes are subjected to considerable “wear and tear”.

Julia’s “fleet” consists of

10 single canoes (canoes for a single person)

12 double canoes (canoes for 2 persons)

12 pedaloes (pedal boats)

2 large canoes (canoes for 4 persons)

The hiring costs per hour for these are,

Single £4; Double £6; Pedaloes £3; Large £8

Julia has kept a record of usage over several years and assesses the total usage

according to the following table,

Table 1 Number of occasions when canoe/pedalo is hired for the period

shown

Length of hire Single Double Pedalo Large

1 hour 1440 2000 1800 150

2 hours 810 1200 1100 90

3 hours 240 130 340 76

4 hours 140 30 0 60

(a) For each category (single, double, etc.) what is the total usage (in hours)?

(b) What percentage of the overall total usage is for double canoes?

(c) For each category (single, double, etc.) what is the total income?

(d) What percentage of the overall total income is due to single canoe hiring?

Due to the heavy “wear and tear” each pedalo has to be replaced every 3

years and each canoe every 5 years. Julia maintains a depreciation fund for

this purpose and puts the same amount of money each year into this fund.

The costs for new are,

Single £200; Double £230; Pedaloes £150; Large £400

(e) How much does Julia put into the fund each year?

Other yearly costs incurred by the business are,

Maintenance £60 per canoe £30 per pedalo

Insurance £1200 (Fixed cost)

Staff £20000 (Fixed cost)

Beach fee £1000 (Fixed cost)

Overheads & Other £3500 (Fixed cost)

(f) What are Julia’s total outgoings (including depreciation) per annum?

(g) What is the annual profit?

I've understood all the questions apart from (g), and the thing I don't get is how am I supposed to calculate the annual profit? The only information I've been given is different kinds of costs she has to pay, as well as how often the different boats are rented, but this is in a period of "several years", so either way I have no premise to begin calculating profit... Or am I mistaken?

Feel free to help me out, it would be much needed since my exam is in a few days!