Sources of REVENUE Sources of VARIABLE EXPENSE

Employee Performance Employee Performance

Low* Average High** Low* Average High**
Sales % Base Payroll
Monthly Base $7,000 $10,000 $13,000 Monthly Wages $3,500 $5,000 $6,500
Gratuities 20% $1,400 $2,000 $2,600 Benefits 20% $700 $1,000 $1,300
Other Revenue 30% $2,100 $3,000 $3,900
Total Revenue $10,500 $15,000 $19,500 Total Payroll $4,200 $6,000 $7,800

Operations
Contractor License % Base
Years Duration: 8 Variable Cost 1 16.0% $1,120 $1,600 $2,080
Interest Charged 7% Variable Cost 2 10.0% $700 $1,000 $1,300
License $30,000 $30,000 $30,000 Variable Cost 3 2.0% $140 $200 $260
Monthly Payment $409 $409 $409
Total Operations $1,960 $2,800 $3,640

Percentage of Average Sources of FIXED EXPENSE

*Low Performer 70%
**High Performer 130% Insurance
Annual Expense $6,000 $6,000 $6,000
Monthly Insurance $500 $500 $500

Equipment Lease
Months of Payment 36 36 36
Company APR 8%
Retail Cost $45,000 $45,000 $45,000
Lease Payment $1,410 $1,410 $1,410
 Pro-Forma P&L: Employee Scenario
Company Employee
Low Avg High Low Avg High

Base Revenue $7,000 $10,000 $13,000 - - -

Gratuities $1,400 $2,000 $2,600 - - -
Other Revenue $2,100 $3,000 $3,900 - - -
License - - - - - -

Compensation ($3,500) ($5,000) ($6,500) $3,500 $5,000 $6,500

Benefits ($700) ($1,000) ($1,300) $700 $1,000 $1,300

Operations ($1,960) ($2,800) ($3,640) - - -

Insurance ($500) ($500) ($500) - - -
Equipment ($1,410) ($1,410) ($1,410) - - -

EBIT $2,430 $4,290 $6,150 $4,200 $6,000 $7,800

Pro Forma P&L: Contractor Scenario

Company Contractor
Low Avg High Low Avg High

Base Revenue 30% $2,100 $3,000 $3,900 70% $4,900 $7,000 $9,100
Gratuities - - - $1,400 $2,000 $2,600
Other Revenue $630 $900 $1,170 $1,470 $2,100 $2,730
License $409 $409 $409 ($409) ($409) ($409)

Compensation - - - - - -
Benefits - - - - - -

Operations - - - ($1,960) ($2,800) ($3,640)

Insurance - - - ($500) ($500) ($500)
Equipment ($1,410) ($1,410) ($1,410)

EBIT $3,139 $4,309 $5,479 $3,491 $5,981 $8,471

Notes on P&Ls:
Base, Gratuities, & Other Revenue net out to the same amounts; the difference is their distribution
License fee has a net impact of zero dollars, but transfers from Contractor to Company
Compensation and Benefits Load are eliminated completely in Contractor Scenario
Operations, Insurance, and Equipment costs are transferred from Company to Contractor
 Company Earnings Comparison

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0
Low Average High
Performing Performing
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