Managing Financial Resources Assignment Sample

Introduction of Managing Financial Resources Assignment 

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Task 1:PART 1- SALES

It is expected that the company will achieve an amount of 5000000 sales each month as per the population in Batley, West Yorkshire. Thus, the estimated or the expected amount for the sales is shows below:

Table 1: Expected monthly sales

(Source: Created by learner)

The above table indicates that the company might receive a major amount of sales in each month; however, it might fluctuate depending on the expenses that might be incurred in each month. It is assumed that the number of sales for each month may vary from 200 to 500 units. Further, it is expected that 30% of the population (5450130) will be achieved which states the number as 1635039.

Annual number of smoothie sales

Table 2: Annual number of smoothie sales

(Source: Created by learner)

The above table indicates the expected amount of sales that may be achieved in the coming 5 years, which is expected to be 38930098736 in total of 5 years.

Seasonality factors affecting the sales:

Table 3: Seasonality factors affecting monthly smoothie sales

(Source: Created by learner)

Table 4: Seasonality factors affecting annual sales of the company

(Source: Created by learner)

The above table shows that the company might experience fluctuations in the amount of monthly as well as annual sales. Further, it is also expected that seasonal factors such as demand of the population of Batley, West Yorkshire might decrease in the month of July and August as well as in the winter season. Thus, the selling price of the smoothie will be 50 dollars, while the selling unit is expected to be 500 units each month.

Monthly sales with graphs

 Monthly sales expected

(Source: Created by learner)

 Expected seasonality factors affecting monthly sales

(Source: Created by learner)

PART 2: Fixed Costs and Fixed Costs per smoothie

It is identified that the Batley, West Yorkshire, has properties on rent which is in Simpsons Fold parking at Chandlers provided by Martin and Leeds and Zeno Properties. Further the rent is expected to be £ 130 PCM and £ 125 PCM respectively thus the rent will be affordable by Zeno properties (Rightmove, 2022).

Table 5: Fixed cost

(Source: Created by learner)

Table 6: Staff wages

(Source: Created by learner)

Other fixed costs to be incurred by the company:

Table 7: Other fixed costs

(Source: Created by learner)

It is assumed that all the fixed costs will not vary, however, it is also estimated that the fixed cost might increase 10% each year due to utilities, salaries and interest expense. 

Part 3 - Variable Costs and Variable Cost per smoothie

Table 8: Variable costs

(Source: Created by learner)

It is assumed that the variable cost of some of the particulars may vary in each month with 10%. Further, it is also estimated that increase in the production or decarse in the value of production might affect the costs of variables.

Part 4 - Total Cost per Smoothie and Selling Price 

Total cost per smoothie

Table 9: Total costs of smoothie

It is expected that the value of smoothie will be 100 pounds, which might vary the amount of fixed as well as variable costs.

Two selling price for smoothie

Selling price at 10% mark up price

Table 10: Selling price at 10% mark up price

Table 11: Selling price at 15% mark up price

(Source: Created by learner)

Smoothie prices by competitors

Table 12: Smoothie prices of competitors

(Source: Created by learner)

Thus, it is assumed that the market price is lower than that of company, since it is expected that the company might acquire higher prices in terms of expenses and hence the company needs to reduce its prices.

Task 2 – Break-even point and scenario analysis

1. a) Calculation of break even point

 Break even point

(Source: Created by learner)

1. b)Margin of safety

Table 13: Margin of safety

(Source: Created by learner)

1. c) Break even chart

 Break even chart

1. d) Scenario analysis

Increase in fixed cost with 10%

 break even cost when fixed cost increases by 10%

BE analysis when variable increases by 5%

 BE analysis when variable increases by 5%

BE when sales are reduced by 5%

Task 3 – Cash Budget

Table 14: Cash budget

(Source: Created by learner)

1. b) Revised cash budget

 Revised cash budget

(Source: Created by learner)

Task 4 – Forecast Profit Statements

Table 13: Profit and loss account

(Source: Created by learner)

Task 5: Presentation

1. a) Introduction

• The location will be Batley, Wek Yorkshire
• Local competitors will be Tesco groceries and Pret a manger (Thegrocer, 2022)
• Focus on all age groups and people following healthy lifestyle

The particular area will be focused since it has limited number of smoothie providers, however, expenses will be reduced to grab the demographic population

1. b) Rationale

• Rent is affordable (Rightmove, 2022)
• Demand for smoothie in the area
• Profit+markup price is 35.7 pounds

A mark up price of 10% is estimated to gain a profit of 35.7 pounds and since the rent is affordable in the area, Batley is expected to be the appropriate place for the business.

1. c) BE analysis

• The fixed cost is estimated to be 137000 pounds
• Variable cost is estimated to be 20100 pounds

The break even is calculated to be 18500 while it is expected that the expenses will be reduced which will decrease variable cost.

1. d) Supplier contract

• Non-acceptance of contract
• Consideration of work motivation and employee morale

The supplier contract will not be accepted since it will increase the variable cost and might not help in increasing the salaries or wages, which might affect the employee’s motivation.

1. e) Assumptions

• Variable cost might vary depending on the expenses
• Fixed cost will increase in the next year

It is assumed that the value of expenses will increase with 10%, while fixed cost will increase in the next year.
References

Rightmove 2022. RIGHTMOVE PROPERTIES. https://www.rightmove.co.uk/property-to-rent/find.html?minBedrooms=0&propertyTypes=other&keywords=&includeLetAgreed=false&channel=RENT&index=0&maxBedrooms=0&sortType=6&minPrice=100&viewType=LIST&maxPrice=700&radius=0.0&maxDaysSinceAdded=14&locationIdentifier=REGION%5E787&showSuggestionFeedback=true

Thegrocer 2022. Smoothie operator: juices & smoothies report 2018 https://www.thegrocer.co.uk/category-reports/smoothie-operator-juices-and-smoothies-report-2018/563631.article

Coachmag 2022. The Best Smoothie Recipes - Coach Mag. https://www.coachmag.co.uk/nutrition/smoothies