UMUC Accounting Monthly Subscriber Ebike Revenue Worksheet

Description

2 attachmentsSlide 1 of 2attachment_1attachment_1attachment_2attachment_2

Unformatted Attachment Preview

ACC 640, Accounting Theory and Policy Formulation
Data Analytics Assignment
Spring 2022
Background information
Divvy is the bicycle sharing system of the Chicago Department of Transportation (CDOT). CDOT
owns the city’s bikes, the bike stations, and service vehicles. Initial funding for the program
came from federal grants for projects that promote economic recovery, reduce traffic
congestion, and improve air quality. Additional funds came from the City’s Tax Increment
Financing program. On June 28, 2013, Divvy was launched with 750 bikes at 75 stations from
the Loop north to Berwyn Ave, west to Kedzie Ave, and south to 59th St.
Currently, Divvy is operated by Motivate (owned by Lyft) for the CDOT. The system currently
includes roughly 5,800 bicycles spread among 581 stations in an area bounded by 87th St. on
the south, Central St. in Evanston on the north, Rainbow Beach Park near South Shore Dr. on
the east, and Harlem Ave.in Oak Park on the west. Divvy bikes are available for use 24 hours a
day, 7 days a week, 365 days a year, and riders have access to all bikes and all stations across
the system.
Today, the Divvy is the second largest bikeshare in the country. The system in New York City is
the only larger one in the country. In total, 119 cities in the U.S have bike share programs.
Financial obligations
A nine-year contract exists between The City of Chicago and Lyft (owner of the current Divvy
operator, Motivate) to give them (Lyft) the exclusive rights to operate the city-owned system
and retain a portion of future advertisement revenue. The contract, finalized in April 2019,
transferred the responsibility of running the Divvy system from the City to Lyft. According to
the terms of the contract, Lyft/Motivate is entitled to all receipts from the bikeshare operations
but must pay an annual fee to the City of Chicago.
The contract between the City and Lyft dramatically increases the annual guaranteed revenues
payable to the City while reducing its financial risk. Lyft was/is obligated to pay the City an
annual amount of $6 million (first payment in June 2019) that increases by four percent
annually. A payment of $6.24 million was made to the City in June 2020 followed by a
payment of $6,489,600 in June 2021. The June 2022 payment is scheduled at $6,749,184.
Further, the City will receive a minimum of $1.5 million annually in guaranteed revenue from
Lyft from advertising and promotions as well as five percent of all revenue from Divvy bike
riders in excess of $20 million per year.
Over the nine-year life of the contract, the City will collect a minimum of $77 million in
guaranteed revenue from Lyft. These funds will be available for investment in transportation
improvements and programming. Finally, the contract requires Lyft to invest $50 million to add
175 stations and 10,500 bikes to the Divvy system, expand the system to all 50 City of Chicago
wards by 2021, and add electric pedal bikes (ebikes) that can be locked to both docks at Divvy
stations and conventional bike racks.
Pricing
Prior to the summer of 2020, there were no electric bikes (ebikes) in the Divvy system. Ebikes
were introduced in July 2020. Before ebikes were introduced to the system, all bikes were
identified as “classic bikes.” The current pricing system (excluding ebikes) is a two-tiered
system for a) subscribers and b) customers. Subscribers pay an annual fee of $108 per year ($9
per month) for an unlimited number of rides up to 45 minutes in duration. Customers have two
options. First, they may purchase a Day Pass for $15 that allows the rider an unlimited number
of three-hour rides in a 24-hour period. Alternatively, customers may purchase individual rides
up to 30 minutes in duration for $3.30 per ride.
Ebikes
Due to Lyft’s financial obligations described above, the financial success of ebikes is essential.
From above, ebikes were introduced into the Divvy system in July 2020. The pricing structure
for ebikes shown below identifies two “zones.” Zones are outline in the image on the next
page.
Zone 1 Pricing



Subscribers (those who pay a $108 annual fee) pay $.15 per minute for their rides.
There is a $2 charge if the trip ends outside Zone 1 (i.e., in Zone 2).
Customers who buy a $15 Day Pass (good for 24 hours) pay $.20 per minute for their
rides and are subject to the same $2 fee if the trip ends outside Zone 1 (i.e., in Zone 2).
Customers who do not buy a $15 Day Pass pay a $3.30 “unlock fee” to access the ebike
in addition to also paying $.20 per minute for their rides. The $2 fee for ending a ride
outside of Zone 1 (i.e., in Zone 2) also applies.
Zone 2 Pricing



Subscribers (those who pay a $108 annual fee) pay nothing for a ride up to 45 minutes
in duration. After 45 minutes, the charge is $.15 per minute. There is no charge if the
trip ends outside Zone 2 (i.e., in Zone 1).
Customers who buy a $15 Day Pass (good for 24 hours) pay nothing for a ride up to 30
minutes in duration. After 30 minutes, the charge is $.20 per minute. There is no
charge if the trip ends outside Zone 2 (i.e., in Zone 1).
Customers who do not buy a $15 Day Pass pay a $3.30 “unlock fee” but nothing for a
ride up to 30 minutes in duration. After 30 minutes, the charge is $.20 per minute.
There is no charge if the trip ends outside Zone 2 (i.e., in Zone 1).

Ebike Parking Violations
Parking violations (at $25 per incident) include locking an ebike to private property, trees, or
any other permanent structures as well as blocking pathways, sidewalks, or ramps. In
addition, subscribers and customers who do not buy a Day Pass will incur a $25 fee for
parking an ebike anywhere outside of Zone 1 or Zone 2. It is estimated that 2% of all nonDay Pass ebike rides incur parking violations. Day Pass rider do not incur parking violations
of any type.
Where do rides originate?
Table 1 below provides estimates of the percentage of total rides in 2021 and 2022 that
originate in each of the two “zones.”
TABLE 1
Month
January
February
March
April
May
June
July
August
September
October
November
December

Percentage of rides originating in
Zone 1: Subscribers/Customers
70%/70%
70%/70%
70%/70%
70%/75%
70%/75%
80%/90%
80%/90%
80%/90%
70%/80%
70%/70%
70%/70%
70%/70%
Percentage of rides originating in
Zone 2: Subscribers/Customers
30%/30%
30%/30%
30%/30%
30%/25%
30%/25%
20%/10%
20%/10%
20%/10%
30%/20%
30%/30%
30%/30%
30%/30%
Assume that 10% of Subscribers and Customers who do not buy Day Passes who start
their ebike rides in Zone 1 each month end their rides in Zone 2. Assume that all Day
Pass customers start and end their ebike rides in Zone 1.
Number of rides
Table 2 below provides information regarding the total number of ebike rides in 2021 as well as
a forecast of the number of ebike rides is 2022 (actual number of rides is available for the first
three months of 2022). Recall that Subscribers pay an annual fee of $108. Subscribers do not
pay an incremental amount to ride ebikes other than the per minute charges (see above).
Customers, on the other hand, either pay $15 for a Day Pass or a $3.30 “unlock fee” to access
ebikes in addition to the per minute charge (see above).
TABLE 2
2021
Number of
Subscriber
Rides
Number of
Customer
Rides
2022
January
25,275
7,753
January**
February
10,174
3,165
February**
March
37,446
22,848
March**
April
56,786
41,111
April
May
89,574
89,613
May
June
112,139
130,720
June
July
114,934
142,869
July
August
118,636
137,618
August
September
133,087
125,439
September
October
163,434
128,769
October
November
130,876
67,449
November
December
45,004
96,973
December
*The 2022 ride projections include future ebike service areas.
Actual or
Projected
Subscriber
Rides*
37,000
43,000
95,000
102,000
110,000
115,000
118,000
121,000
135,000
165,000
130,000
45,000
Projected
Customer
Rides*
10,500
12,000
46,000
48,000
105,000
135,000
150,000
150,000
130,000
130,000
70,000
100,000
**Actual rides in 2022
Customer rides
Table 3 below provides estimates of the number of Day Passes sold per month to Customers in
2021 and 2022 as well as the average number of rides taken during the 24-hour period covered
by the Day Pass.
TABLE 3
2021
January
February
March
April
May
June
July
August
September
October
November
December
Day Passes
Sold
300
200
1,000
1,800
2,500
3,200
3,500
3,400
3,400
3,100
2,100
2,500
2022
January
February
March
April
May
June
July
August
September
October
November
December
Day Passes
Sold
400
200
1,200
2,000
2,800
3,600
4,000
3,800
3,400
3,300
2,300
2,700
Average # of
Rides per Day
Pass
5
5
6
7
9
10
12
12
11
7
6
5
How long are rides?
Table 4 below provides information related to the average duration (in minutes) of ebike rides
in 2021 and 2022 on a month-to-month basis. The information for 2021 is actual data while the
information for 2022 is estimated.
TABLE 4
Month
January
February
March
April
May
June
July
August
September
October
November
December
Average Duration of Trip by
Subscribers (rounded to the
next minute)
10
11
10
9
8
7
7
8
8
7
8
5
Average Duration of Trip by
all Customers (rounded to
the next minute)
9
9
14
10
9
5
7
9
8
8
7
7
Required
Your group has been hired as business advisors/consultants by Motivate/Lyft to assist in their
evaluation of the revenue possibilities of the ebikes. The board of directors (BOD) of
Motivate/Lyft is seeking to better understand the Subscriber/Customer ebike ridership trends.
For all requirements, you are to prepare a video presentation summarizing your analysis for the
BOD. Use Excel to perform your calculations. When you post your presentation, also be sure to
upload your presentation slides to the appropriate folder in Submissions and include your Excel
files. This will allow me to isolate any errors made.
1. Prepare a presentation of 2021 revenue that is generated by the ebikes on a month-bymonth basis. As above, assume that 10% of riders (except those who buy Day Passes)
who start their rides in Zone 1 each month end their rides in Zone 2. Do not consider
the annual fee paid by subscribers as their subscription makes all bikes (classic and
ebikes) available to them. Prepare individual worksheets for:
• Monthly Subscriber ebike revenue including total for 2021
• Monthly Day Pass Customer ebike revenue including total for 2021
• Monthly Non-Day Pass Customer revenue including total for 2021
• Total Ebike revenue for 2021
2. Prepare a forecast of 2022 revenue that is generated by the ebikes on a month-bymonth basis. As above, assume that 10% of riders (except those who buy Day Passes)
who start their rides in Zone 1 each month end their rides in Zone 2. Do not consider
the annual fee paid by subscribers as their subscription makes all bikes (classic and
ebikes) available to them. See applicable tables above for differences in 2022 compared
to 2021. Prepare individual worksheets for:
• Monthly Subscriber ebike revenue including total for 2022
• Monthly Day Pass Customer ebike revenue including total for 2022
• Monthly Non-Day Pass Customer revenue including total for 2022
• Total ebike revenue for 2022
3. The BOD has also asked for your evaluation of a proposal whereby management would
make multi-day passes available to Customers. They have considered introducing a 2Day Pass and/or a Weekend Pass. Choose one of these two options, or another one if
you prefer, and apply it to the revenue forecast for Customers that you prepared for
2022 in Requirement 2. Be sure to formulate a pricing model for the multi-day passes in
both Zone 1 and Zone 2. Also, realize that the sale of multi-day passes will impact the
expected number of Day Passes sold in 2022 – see Table 3 above. It could also impact
the number Customer rides by those who do not buy Day Passes. Clearly state any
reasonable assumptions that were made in your analysis. This includes the percentage
of single and multi-day Day Pass riders who begin their rides in Zone 1 but end their
rides in Zone 2. The objective of your proposal is to enhance revenue generated by the
ebikes. Illustrate the effect of your proposal on the 2022 Customer revenue forecast
from Requirement 2 with a “before” and “after” presentation of 2022 Customer
forecast revenue. Keep in mind that your proposal is to focus on Customers only as your
proposal will not affect Subscriber revenue.
ACC 640, Accounting Theory and Policy Formulation
Data Analytics Assignment
Spring 2022
Background information
Divvy is the bicycle sharing system of the Chicago Department of Transportation (CDOT). CDOT
owns the city’s bikes, the bike stations, and service vehicles. Initial funding for the program
came from federal grants for projects that promote economic recovery, reduce traffic
congestion, and improve air quality. Additional funds came from the City’s Tax Increment
Financing program. On June 28, 2013, Divvy was launched with 750 bikes at 75 stations from
the Loop north to Berwyn Ave, west to Kedzie Ave, and south to 59th St.
Currently, Divvy is operated by Motivate (owned by Lyft) for the CDOT. The system currently
includes roughly 5,800 bicycles spread among 581 stations in an area bounded by 87th St. on
the south, Central St. in Evanston on the north, Rainbow Beach Park near South Shore Dr. on
the east, and Harlem Ave.in Oak Park on the west. Divvy bikes are available for use 24 hours a
day, 7 days a week, 365 days a year, and riders have access to all bikes and all stations across
the system.
Today, the Divvy is the second largest bikeshare in the country. The system in New York City is
the only larger one in the country. In total, 119 cities in the U.S have bike share programs.
Financial obligations
A nine-year contract exists between The City of Chicago and Lyft (owner of the current Divvy
operator, Motivate) to give them (Lyft) the exclusive rights to operate the city-owned system
and retain a portion of future advertisement revenue. The contract, finalized in April 2019,
transferred the responsibility of running the Divvy system from the City to Lyft. According to
the terms of the contract, Lyft/Motivate is entitled to all receipts from the bikeshare operations
but must pay an annual fee to the City of Chicago.
The contract between the City and Lyft dramatically increases the annual guaranteed revenues
payable to the City while reducing its financial risk. Lyft was/is obligated to pay the City an
annual amount of $6 million (first payment in June 2019) that increases by four percent
annually. A payment of $6.24 million was made to the City in June 2020 followed by a
payment of $6,489,600 in June 2021. The June 2022 payment is scheduled at $6,749,184.
Further, the City will receive a minimum of $1.5 million annually in guaranteed revenue from
Lyft from advertising and promotions as well as five percent of all revenue from Divvy bike
riders in excess of $20 million per year.
Over the nine-year life of the contract, the City will collect a minimum of $77 million in
guaranteed revenue from Lyft. These funds will be available for investment in transportation
improvements and programming. Finally, the contract requires Lyft to invest $50 million to add
175 stations and 10,500 bikes to the Divvy system, expand the system to all 50 City of Chicago
wards by 2021, and add electric pedal bikes (ebikes) that can be locked to both docks at Divvy
stations and conventional bike racks.
Pricing
Prior to the summer of 2020, there were no electric bikes (ebikes) in the Divvy system. Ebikes
were introduced in July 2020. Before ebikes were introduced to the system, all bikes were
identified as “classic bikes.” The current pricing system (excluding ebikes) is a two-tiered
system for a) subscribers and b) customers. Subscribers pay an annual fee of $108 per year ($9
per month) for an unlimited number of rides up to 45 minutes in duration. Customers have two
options. First, they may purchase a Day Pass for $15 that allows the rider an unlimited number
of three-hour rides in a 24-hour period. Alternatively, customers may purchase individual rides
up to 30 minutes in duration for $3.30 per ride.
Ebikes
Due to Lyft’s financial obligations described above, the financial success of ebikes is essential.
From above, ebikes were introduced into the Divvy system in July 2020. The pricing structure
for ebikes shown below identifies two “zones.” Zones are outline in the image on the next
page.
Zone 1 Pricing



Subscribers (those who pay a $108 annual fee) pay $.15 per minute for their rides.
There is a $2 charge if the trip ends outside Zone 1 (i.e., in Zone 2).
Customers who buy a $15 Day Pass (good for 24 hours) pay $.20 per minute for their
rides and are subject to the same $2 fee if the trip ends outside Zone 1 (i.e., in Zone 2).
Customers who do not buy a $15 Day Pass pay a $3.30 “unlock fee” to access the ebike
in addition to also paying $.20 per minute for their rides. The $2 fee for ending a ride
outside of Zone 1 (i.e., in Zone 2) also applies.
Zone 2 Pricing



Subscribers (those who pay a $108 annual fee) pay nothing for a ride up to 45 minutes
in duration. After 45 minutes, the charge is $.15 per minute. There is no charge if the
trip ends outside Zone 2 (i.e., in Zone 1).
Customers who buy a $15 Day Pass (good for 24 hours) pay nothing for a ride up to 30
minutes in duration. After 30 minutes, the charge is $.20 per minute. There is no
charge if the trip ends outside Zone 2 (i.e., in Zone 1).
Customers who do not buy a $15 Day Pass pay a $3.30 “unlock fee” but nothing for a
ride up to 30 minutes in duration. After 30 minutes, the charge is $.20 per minute.
There is no charge if the trip ends outside Zone 2 (i.e., in Zone 1).

Ebike Parking Violations
Parking violations (at $25 per incident) include locking an ebike to private property, trees, or
any other permanent structures as well as blocking pathways, sidewalks, or ramps. In
addition, subscribers and customers who do not buy a Day Pass will incur a $25 fee for
parking an ebike anywhere outside of Zone 1 or Zone 2. It is estimated that 2% of all nonDay Pass ebike rides incur parking violations. Day Pass rider do not incur parking violations
of any type.
Where do rides originate?
Table 1 below provides estimates of the percentage of total rides in 2021 and 2022 that
originate in each of the two “zones.”
TABLE 1
Month
January
February
March
April
May
June
July
August
September
October
November
December

Percentage of rides originating in
Zone 1: Subscribers/Customers
70%/70%
70%/70%
70%/70%
70%/75%
70%/75%
80%/90%
80%/90%
80%/90%
70%/80%
70%/70%
70%/70%
70%/70%
Percentage of rides originating in
Zone 2: Subscribers/Customers
30%/30%
30%/30%
30%/30%
30%/25%
30%/25%
20%/10%
20%/10%
20%/10%
30%/20%
30%/30%
30%/30%
30%/30%
Assume that 10% of Subscribers and Customers who do not buy Day Passes who start
their ebike rides in Zone 1 each month end their rides in Zone 2. Assume that all Day
Pass customers start and end their ebike rides in Zone 1.
Number of rides
Table 2 below provides information regarding the total number of ebike rides in 2021 as well as
a forecast of the number of ebike rides is 2022 (actual number of rides is available for the first
three months of 2022). Recall that Subscribers pay an annual fee of $108. Subscribers do not
pay an incremental amount to ride ebikes other than the per minute charges (see above).
Customers, on the other hand, either pay $15 for a Day Pass or a $3.30 “unlock fee” to access
ebikes in addition to the per minute charge (see above).
TABLE 2
2021
Number of
Subscriber
Rides
Number of
Customer
Rides
2022
January
25,275
7,753
January**
February
10,174
3,165
February**
March
37,446
22,848
March**
April
56,786
41,111
April
May
89,574
89,613
May
June
112,139
130,720
June
July
114,934
142,869
July
August
118,636
137,618
August
September
133,087
125,439
September
October
163,434
128,769
October
November
130,876
67,449
November
December
45,004
96,973
December
*The 2022 ride projections include future ebike service areas.
Actual or
Projected
Subscriber
Rides*
37,000
43,000
95,000
102,000
110,000
115,000
118,000
121,000
135,000
165,000
130,000
45,000
Projected
Customer
Rides*
10,500
12,000
46,000
48,000
105,000
135,000
150,000
150,000
130,000
130,000
70,000
100,000
**Actual rides in 2022
Customer rides
Table 3 below provides estimates of the number of Day Passes sold per month to Customers in
2021 and 2022 as well as the average number of rides taken during the 24-hour period covered
by the Day Pass.
TABLE 3
2021
January
February
March
April
May
June
July
August
September
October
November
December
Day Passes
Sold
300
200
1,000
1,800
2,500
3,200
3,500
3,400
3,400
3,100
2,100
2,500
2022
January
February
March
April
May
June
July
August
September
October
November
December
Day Passes
Sold
400
200
1,200
2,000
2,800
3,600
4,000
3,800
3,400
3,300
2,300
2,700
Average # of
Rides per Day
Pass
5
5
6
7
9
10
12
12
11
7
6
5
How long are rides?
Table 4 below provides information related to the average duration (in minutes) of ebike rides
in 2021 and 2022 on a month-to-month basis. The information for 2021 is actual data while the
information for 2022 is estimated.
TABLE 4
Month
January
February
March
April
May
June
July
August
September
October
November
December
Average Duration of Trip by
Subscribers (rounded to the
next minute)
10
11
10
9
8
7
7
8
8
7
8
5
Average Duration of Trip by
all Customers (rounded to
the next minute)
9
9
14
10
9
5
7
9
8
8
7
7
Required
Your group has been hired as business advisors/consultants by Motivate/Lyft to assist in their
evaluation of the revenue possibilities of the ebikes. The board of directors (BOD) of
Motivate/Lyft is seeking to better understand the Subscriber/Customer ebike ridership trends.
For all requirements, you are to prepare a video presentation summarizing your analysis for the
BOD. Use Excel to perform your calculations. When you post your presentation, also be sure to
upload your presentation slides to the appropriate folder in Submissions and include your Excel
files. This will allow me to isolate any errors made.
1. Prepare a presentation of 2021 revenue that is generated by the ebikes on a month-bymonth basis. As above, assume that 10% of riders (except those who buy Day Passes)
who start their rides in Zone 1 each month end their rides in Zone 2. Do not consider
the annual fee paid by subscribers as their subscription makes all bikes (classic and
ebikes) available to them. Prepare individual worksheets for:
• Monthly Subscriber ebike revenue including total for 2021
• Monthly Day Pass Customer ebike revenue including total for 2021
• Monthly Non-Day Pass Customer revenue including total for 2021
• Total Ebike revenue for 2021
2. Prepare a forecast of 2022 revenue that is generated by the ebikes on a month-bymonth basis. As above, assume that 10% of riders (except those who buy Day Passes)
who start their rides in Zone 1 each month end their rides in Zone 2. Do not consider
the annual fee paid by subscribers as their subscription makes all bikes (classic and
ebikes) available to them. See applicable tables above for differences in 2022 compared
to 2021. Prepare individual worksheets for:
• Monthly Subscriber ebike revenue including total for 2022
• Monthly Day Pass Customer ebike revenue including total for 2022
• Monthly Non-Day Pass Customer revenue including total for 2022
• Total ebike revenue for 2022
3. The BOD has also asked for your evaluation of a proposal whereby management would
make multi-day passes available to Customers. They have considered introducing a 2Day Pass and/or a Weekend Pass. Choose one of these two options, or another one if
you prefer, and apply it to the revenue forecast for Customers that you prepared for
2022 in Requirement 2. Be sure to formulate a pricing model for the multi-day passes in
both Zone 1 and Zone 2. Also, realize that the sale of multi-day passes will impact the
expected number of Day Passes sold in 2022 – see Table 3 above. It could also impact
the number Customer rides by those who do not buy Day Passes. Clearly state any
reasonable assumptions that were made in your analysis. This includes the percentage
of single and multi-day Day Pass riders who begin their rides in Zone 1 but end their
rides in Zone 2. The objective of your proposal is to enhance revenue generated by the
ebikes. Illustrate the effect of your proposal on the 2022 Customer revenue forecast
from Requirement 2 with a “before” and “after” presentation of 2022 Customer
forecast revenue. Keep in mind that your proposal is to focus on Customers only as your
proposal will not affect Subscriber revenue.

Purchase answer to see full
attachment

Tags:
accounting

Theory and Policy

Monthly Subscriber Ebike Revenue

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.

Reviews, comments, and love from our customers and community:

This page is having a slideshow that uses Javascript. Your browser either doesn't support Javascript or you have it turned off. To see this page as it is meant to appear please use a Javascript enabled browser.

Peter M.
Peter M.
So far so good! It's safe and legit. My paper was finished on time...very excited!
Sean O.N.
Sean O.N.
Experience was easy, prompt and timely. Awesome first experience with a site like this. Worked out well.Thank you.
Angela M.J.
Angela M.J.
Good easy. I like the bidding because you can choose the writer and read reviews from other students
Lee Y.
Lee Y.
My writer had to change some ideas that she misunderstood. She was really nice and kind.
Kelvin J.
Kelvin J.
I have used other writing websites and this by far as been way better thus far! =)
Antony B.
Antony B.
I received an, "A". Definitely will reach out to her again and I highly recommend her. Thank you very much.
Khadija P.
Khadija P.
I have been searching for a custom book report help services for a while, and finally, I found the best of the best.
Regina Smith
Regina Smith
So amazed at how quickly they did my work!! very happy♥.