RCS Financial Planning & Budgeting 2

Question 1

A residential cleaning business charges $120 for a standard 3-hour clean. If supplies cost $18 and labor is $45, what is the gross profit margin?

Accepted Answer

52.5%

Answer

Gross profit = $120 - $18 - $45 = $57; margin = $57/$120 = 47.5%... wait: ($120-$63)/$120 = $57/$120 = 47.5%, so the correct answer is 47.5%.

Question 2

Which pricing strategy sets rates based on what competitors charge in the local market?

Accepted Answer

Competitive pricing

Answer

Competitive pricing sets your rates by benchmarking against what rival cleaning services charge in the same market.

Question 3

A cleaning company has fixed monthly costs of $2,000 and a contribution margin of $40 per job. How many jobs are needed to break even?

Accepted Answer

50 jobs

Answer

Break-even = Fixed costs / Contribution margin = $2,000 / $40 = 50 jobs.

Question 4

What is the primary purpose of maintaining a cash flow forecast for a cleaning business?

Accepted Answer

To anticipate periods of low cash and plan ahead

Answer

A cash flow forecast helps owners identify upcoming cash shortfalls so they can arrange financing or adjust spending in advance.

Question 5

A cleaner spends $600/month on cleaning products for 60 jobs. If a new supplier reduces cost by 15%, what is the new monthly supply cost?

Accepted Answer

$510

Answer

$600 × (1 - 0.15) = $600 × 0.85 = $510.

(RCS) Residential Cleaning Specialist Certification Practice Test