Business Plan:563947

Question:

This Business Plan is for a New Business which I wish to start. I need the following budgets mocked up for potential investors:

 

All reports over a 12month Period

  • Purchases Budget
  • Cost of Sales or Cost of Services Budget
  • Selling and Administrative expenses budget
  • Schedule of ‘expected collections from customers’ budget
  • Schedule of ‘expected payments for purchases’ budget
  • Cash budget
  • Income Statement budget
  • Statement of Financial Position budget

 

I have started on an Excel worksheet, I have done a simple expense and CVP analysis. I just need the rest done.

I will also need a detail explanation so I can add to my report in terms of each budgets 250 words each.

Remember this is a mockup for a new business I predict that the sales will be 10% lower in Winter/Autumn and 10% higher in in Spring/Summer.

All the information should on the excel sheet to help formulate the rest of the budgets, but if the information required is not there just make it up but explain it in the report part.

Answer:

Business description:

This is the business plan for the product ­­­­­­­­­­­­­­­­­­­_____________. This is one of the most unique products and hence, has a huge potential in the market.

Marketing strategy:

The following marketing strategy would be used:

  • The company shall partner with the other companies that are thinking of manufacturing somewhat similar product. For this, negotiation shall be undertaken.
  • A collaboration with the users shall be undertaken
  • The customers shall be helped in order to solve a problem
  • New channels and platforms shall be experimented. For this, a study shall be undertaken
  • The customers shall be interacted with so that the wishes and the needs of the customers can be known and dealt with utmost priority

 

Financial structure:

The cash budget for the product has been laid down and this indicates that an amount of $520 million is required.

This would be financed as follows:

  • A loan from the bank shall be taken for an amount of $ 470 million and the rest would be financed as follows:
  • Venture capital
  • As share capital from the investors in the market

The combination shall be finalised once the venture capitalists confirm the amount that they invest in the business.

Budgets:

Data for calculations    
             
  First quarter Second quarter Third quarter Next year    
             
Estimated unit sales               74,400.00            59,520.00             66,960.00        89,280.00    
             
Sales price                 7,000.00              7,000.00               7,000.00          7,000.00    
             
Direct labour hours per unit 9 9 9 9    
             
Direct labour hourly rate                      50.00                   50.00                    50.00               50.00    
             
Direct materials cost per square metre                 1,070.00              1,070.00               1,070.00          1,070.00    
             
Selling and admin expense      1897,81,302.83   1707,99,149.33    2032,96,678.99                     –    

 

The above is the budgeted sale units, selling price etc for the product ABC that would be manufactured. The sales units are expected to 74,400, 59,520 and 66,960 for First, second and third quarter respectively. The selling price of the product is expected to be $9 per unit, the direct labour hours for each unit would be 9 and the direct labour rate would be $50 per hour. Also, the direct materials cost per square metre shall be $1070 for each unit and the selling and administrative expense would be fixed at the rate of $

     1897,81,302.83   1707,99,149.33    2032,96,678.99

 

For first, second and third quarter respectively.

The following are the required budgets:

Purchase budget:

The following is the required budget:

(Amounts in $)  
             
           
    First quarter Second quarter Third quarter  Total  
 Particulars            
             
 Direct material usuage:            
             
             
             
 Production budget           62,512.00           63,984.00         80,352.00         2,06,848.00  
             
 Direct material quantity(per square metre)             1,070.00             1,070.00           1,070.00    
             
 Direct material usuage (in square metres)    668,87,840.00    684,62,880.00  859,76,640.00   1544,39,520.00  
             

 

The calculation of the purchase budget includes the following:

Budgeted Direct Material Purchases in Units
= Budgeted Beginning Direct Material in Units
+ Direct Material in Units Needed for Production
− Budgeted Ending Direct Material in Units

Direct material purchase budget:

    First quarter Second quarter Third quarter  Total
 Particulars          
           
 Direct material usuage:          
           
           
           
 Production budget                 62,512.00                63,984.00         80,352.00       2,06,848.00
           
 Direct Material in Units Needed for Production  Part A            2,50,048.00             2,55,936.00      3,21,408.00       8,27,392.00
 Part B            3,75,072.00             3,83,904.00      4,82,112.00     12,41,088.00
           
 Less: Budgeted Ending Direct Material in Units  Part A               14,880.00                11,904.00         13,392.00  
 Part B               14,880.00                11,904.00         13,392.00  
           
Purchase budget  Part A            2,35,168.00             2,44,032.00      3,08,016.00  
   Part B            3,60,192.00             3,72,000.00      4,68,720.00  
           
In Amounts  Part A 20929952 21718848 27413424  
   Part B        428,62,848.00         442,68,000.00  557,77,680.00  

 

Cost of Sales or Cost of Services Budget:

 

The following is the required budget:

 

(Amounts in $)
           
    First quarter Second quarter Third quarter Total  
Particulars            
             
 Sale                74,400.00            59,520.00                 66,960.00    
             
 Opening stock                47,600.00            35,712.00                 40,176.00    
 Cost per unit                  2,120.00              2,120.00                   2,120.00    (assuming the marginal costing)
             
 Cost of goods sold       1009,12,000.00     757,09,440.00          851,73,120.00    
             
 Others                26,800.00            23,808.00                 26,784.00    
 Cost per unit                  3,035.92              2,669.40                   2,530.08    
             
 Cost of goods sold         813,62,601.04     635,53,171.84          677,65,559.66    
             
 Total cost of goods sold       1822,74,601.04   1392,62,611.84        1529,38,679.66    
             

 

The calculation of the cost of sales includes the following:

=Beginning inventory + purchases – ending inventory.

 

Selling and Administrative expenses budget:

 

The following is the required budget:

 

  First quarter Second quarter Third quarter
       
Selling and admin expense      1897,81,302.83   1707,99,149.33    2032,96,678.99

 

 

The calculation of the cost of sales includes the following:

=Budgeted selling expenses + budgeted administrative expenses

 

 

Schedule of ‘expected collections from customers’ budget:

 

The following is the required budget:

   (Amounts in $)  
           
 Particulars First quarter Second quarter Third quarter  Total  
           
 Receipts:          
           
 Sales:          
 Previous months    499,96,800.00        
 First quarter  3541,44,000.00  1562,40,000.00         5208,00,000.00  
 Second quarter    2833,15,200.00  1249,92,000.00       4166,40,000.00  
 Third quarter      3187,29,600.00       4687,20,000.00  
           
 Total cash inflow  4041,40,800.00  4935,55,200.00  4437,21,600.00                             –    

 

 

Schedule of ‘expected payments for purchases’ budget:

 

The following is the required budget:

 

   (Amounts in $)  
           
 Particulars First quarter Second quarter Third quarter  Total  
           
 Payments:          
           
 Purchases    637,92,800.00    659,86,848.00    831,91,104.00       2129,70,752.00  
           
 Total cash outflow    637,92,800.00    659,86,848.00    831,91,104.00       2129,70,752.00  

 

 

Cash budget:

 

The following is the required budget:

   (Amounts in $)  
           
 Particulars First quarter Second quarter Third quarter  Total  
           
 Receipts:          
           
 Sales:          
 Previous months    499,96,800.00        
 First quarter  3541,44,000.00  1562,40,000.00         5208,00,000.00  
 Second quarter    2833,15,200.00  1249,92,000.00       4166,40,000.00  
 Third quarter      3187,29,600.00       4687,20,000.00  
 Cash borrowed      538,43,702.00      
           
 Total cash inflow  4041,40,800.00  4933,98,902.00  4437,21,600.00                             –    
           
 Payments:          
           
 Purchases    637,92,800.00    659,86,848.00    831,91,104.00       2129,70,752.00  
 Dividend  1800,00,000.00           1800,00,000.00  
 Purchase of land      386,88,000.00           386,88,000.00  
 Direct labour    281,30,400.00    287,92,800.00    361,58,400.00    
 Other expenses  1897,81,302.83  1707,99,149.33  2032,96,678.99       5638,77,131.15  
           
 Total cash outflow  4617,04,502.83  3042,66,797.33  3226,46,182.99     10886,17,483.15  
 Opening balance      37,20,000.00               37,20,000.00  
 Cash repaid        538,43,702.00         538,43,702.00  
 Interest paid          2,69,218.51        2,69,218.51             5,38,437.02  
           
 Cash available   -538,43,702.83  3039,97,578.82  2685,33,262.48       5186,87,138.47  
           

 

The following is the formula for cash budget:

 

Beginning cash balance + receipts – payments

 

Income Statement budget:

 

The following is the required budget:

 

(Amounts in $)  
         
 Particulars First quarter Second quarter Third quarter  
         
 Revenue        5208,00,000.00        4166,40,000.00    4687,20,000.00  
 Less: cost of goods sold:        1822,74,601.04        1392,62,611.84    1529,38,679.66  
         
 Gross profit        3385,25,398.96        2773,77,388.16    3157,81,320.34  
 Less: fixed cost        1897,81,302.83        1707,99,149.33    2032,96,678.99  
         
 Net profit        1487,44,096.13        1065,78,238.83    1124,84,641.35  
         

 

Statement of Financial Position budget:

 

The following is the required budget:

   Statement of financial position:  
       
   Assets  (Amounts in $)  
       
   Inventory  2114,13,299.04  
   Office supplies  1573,93,677.26  
       
   Total assets  3688,06,976.30  
       
   Liabilities:    
       
   Payables                        –  
   Capital  3688,06,976.30  
       
  Total liabilities  3688,06,976.30