Background information Divvy is abicycle sharing system of the…

QuestionBackground information Divvy is abicycle sharing system of the…Background informationDivvy is a bicycle sharing system of the Chicago Department of Transportation (CDOT). CDOT owns the city’s bikes, the bike stations, and service vehicles. On June 28, 2013, Divvy was launched with 750 “classic” (pedal) 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 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.In July 2020 Divvy introduced ebikes in the city of Chicago.  Divvy also continues to have the traditional “classic” bikes available in Chicago. In order to encourage riders to use the Divvy bike system a rider may purchase an annual subscription.  Subscribers will pay the full amount of the annual fee at the beginning of their subscription period (i.e. not paid monthly) and this will entitle the rider to unlimited rides on the classic bikes up to 45 minutes in duration for 12 months.  Subscribers may choose to exclusively ride classic bikes or if they choose to ride an ebike then subscribers will incur additional fees.  (see below)   Ebike Pricing: The pricing structure for ebikes identifies two “zones.”  See image on the page below.The ebike pricing structure is as follows:Zone 1Subscribers (those who pay a $108 annual fee) pay $.15 per minute for each ride.  There is a $2 charge if the trip ends outside a Divvy station or e-station in Zone 1(i.e. ends in in Zone 2). Customers who buy a $15 Day Pass (good 24 hours) pay $.20 per minute and are subject to the same $2 fee if the trip ends outside a Divvy station or e-station in Zone 1 (i.e., ends 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.  The $2 fee for ending a ride a Divvy station or e-station outside of Zone 1 (i.e. ends in Zone 2) also applies.Zone 2Subscribers (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 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 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 in Zone 1.Additional Fees for Ebike Parking Violations:  Parking violations — including locking the ebike to itself, private property, trees, or any other structures as well as blocking pathways, sidewalks, or ramps — incur a $25 fee.  Subscribers and customers will be charged a $25 fee for parking the ebike outside of Zone 1 or Zone 2 (i.e., the service area).  It is estimated that 2% of all  non day pass ebike rides incur parking violations.      Where do rides originate?Table 1 below provides estimates of the percentage of total rides in 2021 and 2022 that originate in the two “zones.”TABLE 1 Month Percentage of rides originating inZone 1: Subscribers/Customers Percentage of rides originating in Zone 2: Subscribers/CustomersJanuary 70%/70% 30%/30%February 70%/70% 30%/30%March 70%/70% 30%/30%April 70%/75% 30%/25%May 70%/75% 30%/25%June 80%/90% 20%/10%July 80%/90% 20%/10%August 80%/90% 20%/10%September 70%/80% 30%/20%October 70%/70% 30%/30%November 70%/70% 30%/30%December 70%/70% 30%/30% Assume that 10% of Subscribers and customers who do not buy day passes are riders who start their ebike rides in Zone 1 each month end their rides in Zone 2Assume that all day pass customers start their rides in Zone 1 and end their 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 number of ebike rides for 2022. Recall that subscribers pay an annual fee of $108 which provides unlimited classic bike rides.  Subscribers  pay the per minute charge  to ride ebikes(see above).  Customers 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 22021 Actual Number of Subscriber Rides Actual Number of Customer Rides*   2022 Projected Subscriber Rides Projected Customer Rides* January 25,275 7,753   January** 37,000 10,500February 10,174 3,165   February** 43,000 12,000March 37,446 22,848   March** 95,000 46,000April 56,786 41,111   April 102,000 48,000May 89,574 89,613   May 110,000 105,000June 112,139 130,720   June 115,000 135,000July 114,934 142,869   July 118,000 150,000August 118,636 137,618   August 121,000 150,000September 133,087 125,439   September 135,000 130,000October 163,434 128,769   October 165,000 130,000November 130,876 67,449   November 130,000 70,000December 45,004 96,973   December 45,000 100,000 * Customer rides include day pass and single ride customers** Actual 2022 rides  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 32021 Day Passes Sold   2022 Day Passes Sold   Average # of Rides per Day Pass in 2021 & 2022January 300   January 400   5February 200   February 200   5March 1,000   March 1,200   6April 1,800   April 2,000   7May 2,500   May 2,800   9June 3,200   June 3,600   10July 3,500   July 4,000   12August 3,400   August 3,800   12September 3,400   September 3,400   11October 3,100   October 3,300   7November 2,100   November 2,300   6December 2,500   December 2,700   5   How long are rides?Table 4 below provides information related to the average duration (in minutes) of ebike rides for 2021 and 2022 on a month-to-month basis.  The duration for customers includes day pass and single ride customers. TABLE 4Month Average Duration of Trip by Subscribers (rounded to the next minute) *** Average Duration of Trip by Customers (rounded to the next minute) ***January 10 9February 11 9March 10 14April 9 10May 8 9June 7 5July 7 7August 8 9September 8 8October 7 8November 8 7December 5 7 *** Averages are actual average duration in 2021.  2022 ride durations are projected to be the same as the 2021 duration. RequiredYou have been hired as a business advisor to Divvy Bikes /Motivate/Lyft (DML) to assist in their evaluation of the incremental revenue that is attributable to ebikes.  The Board is seeking to understand the incremental revenue from e bikes in 2021 and the projected 2022 incremental ebike revenue.   In order to determine the impact ebikes has had on Divvy’s 2021 and projected 2022 revenue you will calculate the annual and monthly 2021 and 2022 ebike revenue.   All calculations must be done in Excel.  You may use multiple worksheets, etc.  All calculations/totals must be clearly labeled.  You must calculate the following:2021: Monthly ebike revenue for SubscribersMonthly ebike revenue for Day Pass CustomersMonthly ebike revenue for non Day Pass CustomersTotal 2021 ebike revenue 2022: Monthly ebike revenue for SubscribersMonthly ebike revenue for Day Pass CustomersMonthly ebike revenue for non Day Pass CustomersTotal 2022 ebike revenueAccountingBusinessFinancial AccountingACC 350Share Question