1. Decision Making Game

2. Fantastic Cleaning Co.
15 Employees - AED 8/hour
(Maximum 40 hours a week)
Option1 Option2
(Rent Machines) (without Machines)
Cost per cleaning Service (2 Hours)
Direct Materials AED2 AED 12
Direct Labor = 8 AED/hour X 2 Hours AED 16 AED 16
Variable OH AED 2 AED 3
Variable Selling Cost AED 5 AED 9
Monthly Fixed Cost AED 10,000 AED 10,000
Machine Rent Cost AED 15,000 AED 0
Selling Price AED 70 AED 70
Variable Cost AED 25 AED 40
Contribution Margin AED 45 AED 30

3. Option1 (Rent Cleaning Machines)
Direct Materials = AED 2 Selling Price = AED 70
Direct Labor = 8 AED/hour X 2 Hours = AED 16 Variable Cost = AED 25
Variable OH = AED 2 Contribution Margin = AED 45
Selling Cost = AED 5
Fixed Cost = AED 10,000
Machine Rent Cost = AED 15,000/ month
Breakeven (Profit Required = AED 20,000)
Sales = VC + FC + Required Profit
70 X Cleaning Services = 25 X Cleaning Services + 25,000 + 20,000
45 X Cleaning Services = 45,000
Cleaning Services = 1000

4. Option2 (without Cleaning Machines)
Direct Materials = AED 12 Selling Price = AED 70
Direct Labor = 8 AED/hour X 2 Hours = AED 16 Variable Cost = AED 40
Variable OH = AED 3 Contribution Margin = AED 30
Selling Cost = AED 9
Fixed Cost = AED 10,000
Machine Rent Cost = 0
Breakeven (Profit Required = AED 20,000)
Sales = VC + FC + Required Profit
70 X Cleaning Services = 40 X Cleaning Services + 10,000 + 20,000
30 X Cleaning Services = 30,000
Cleaning Services = 1000

5. Option1 (Rent Cleaning Machines) Option2 (without Cleaning Machines)
Direct Materials = AED 2 Direct Materials = AED 12
Direct Labor = 8 AED/hour X 2 Hours = AED 16 Direct Labor = 8 AED/hour X 2 Hours = AED 16
Variable OH = AED 2 Variable OH = AED 3
Selling Cost = AED 5 Selling Cost = AED 9
Fixed Cost = AED 10,000 Fixed Cost = AED 10,000
Machine Rent Cost = AED 15,000/ month Machine Rent Cost = AED 0
Breakeven - Cleaning Services = 1000 Breakeven - Cleaning Services = 1000

6. + AED 11,000
Month2:
# of Cleaning Services =
Option1 (Rent Cleaning Machines) Option2 (without Cleaning Machines)
Direct Materials = AED 2 Direct Materials = AED 12
Direct Labor = 8 AED/hour X 2 Hours = AED 16 Direct Labor = 8 AED/hour X 2 Hours = AED 16
Variable OH = AED 2 Variable OH = AED 3
Selling Cost = AED 5 Selling Cost = AED 9
Monthly Fixed Cost = AED 10,000 Monthly Fixed Cost = AED 10,000
Machine Rent Cost = AED 15,000/ month Machine Rent Cost = AED 0
Selling Price = AED 70 Selling Price = AED 70
Variable Cost = AED 25 Variable Cost = AED 40
Contribution Margin = AED 45 Contribution Margin = AED 30
Profit = (45 X 800) – 25,000 = AED 11,000 Profit = (30 X 800) – 10,000 = AED 14,000

7. + AED 11,000 + AED 31,250
Month2:
# of Cleaning Services =
Option1 (Rent Cleaning Machines) Option2 (without Cleaning Machines)
Direct Materials = AED 2 Direct Materials = AED 12
Direct Labor = 8 AED/hour X 2 Hours = AED 16 Direct Labor = 8 AED/hour X 2 Hours = AED 16
Variable OH = AED 2 Variable OH = AED 3
Selling Cost = AED 5 Selling Cost = AED 9
Monthly Fixed Cost = AED 10,000 Monthly Fixed Cost = AED 10,000
Machine Rent Cost = AED 15,000/ month Machine Rent Cost = AED 0
Selling Price = AED 70 Selling Price = AED 70
Variable Cost = AED 25 Variable Cost = AED 40
Contribution Margin = AED 45 Contribution Margin = AED 30
Profit = (45 X 1250) – 25,000 = AED 31,250 Profit = (30 X 1250) – 10,000 = AED 27,500

8. + AED 11,000 + AED 31,250 + AED 1,400
.com
Option1 (Rent Machines) Option2 (without Machines)
Direct Materials = AED 2 Direct Materials = AED 12
Direct Labor = AED 16 Direct Labor = AED 16
Variable OH = AED 2 Variable OH = AED 3
Selling Cost = AED 5 Selling Cost = AED 9
Selling Price = AED 70 Selling Price = AED 70
Variable Cost = AED 25 Variable Cost = AED 40
Contribution Margin = AED 45 Contribution Margin = AED 30
Commission Rate (25%) Commission Rate (25%)
Minimum Price = Minimum Price =
Price 38 = Profit (1,200 to 1,400) Price 38 = Loss
Price 43 = Profit (1,100 to 1,600) Price 43 = Profit (600 - 1,000)
Price 46 = Profit (800 to 1800) Price 46 = Profit (400 – 1400)

9. + AED 11,000 + AED 31,250 + AED 1,400
.com
Option1 (Rent Machines) Option2 (without Machines)
Direct Materials = AED 2 Direct Materials = AED 12
Direct Labor = AED 16 Direct Labor = AED 16
Variable OH = AED 2 Variable OH = AED 3
Selling Cost = AED 5 Selling Cost = AED 9
Selling Price = AED 70 Selling Price = AED 70
Variable Cost = AED 25 Variable Cost = AED 40
Contribution Margin = AED 45 Contribution Margin = AED 30
Commission Rate (25%) Commission Rate (25%)
Minimum Price = Minimum Price =
Price 38 = Profit 1,300 Price 38 = Loss
Price 43 = Profit 1,400 Price 43 = Profit 900
Price 46 = Profit 900 Price 46 = Profit 1,300

10. + AED 11,000 + AED 31,250 + AED 1,400 + 800
Direct Materials Saving
for Bulk order
AED 1500
Other
Fantastic Cleaning
Cleaning Co. Company

11. + AED 11,000 + AED 31,250 + AED 1,400 + 800 +?
Advertising Strategy
Other Cleaning Company
AED 5,500 AED 6,250
Fantastic
Cleaning Co. AED 6,500 AED 5,250

12. + AED 11,000 + AED 31,250 + AED 1,400 + 800 +?
Fantastic Cleaning Co.
Total Profit =