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Introduction to Accounting and Finance: Hair silk- financial plan and pitch - Essay Example
Hair silk- financial plan and pitch
The business aims to manufacture 63,709 shampoo bottles during the first year of operations. Each unit would be priced at £ 7/bottle. The projections for sales revenue would be around 30% monthly…
The procedure for taking orders would be first come, first serve basis. As the orders increase, production would also be adjusted so it can come up with the volume. For the time being, credit transactions would not be entertained for the first two to three years of operations to avoid debtors. The concept of jus-in-time production by the Japanese would be adapted so there is no need for an inventory. The following is a summary of cost break up for our product. Total Sales (in ?) 445962 Total Units sold 63709 Selling cost per unit (in ?) 7 Variable Cost Direct materials ( in %) 25% of selling cost Direct Labour ( in %) 25% of selling cost Direct expenses (in %) 10% of selling cost Variable selling cost 7.5% of selling cost QN 2 MARGINAL COST STATEMENT One of the fundamental concepts that should be understood is Marginal Cost. According to Investopedia, marginal cost is “ the change in total cost from making or producing one additional item.” Any business is interested in determining the marginal cost because it has positive effects on economies of scale. Producers or manufacturers often make calculations that would help them arrive at the best production level. If a business would like a more concrete calculation of marginal cost, they can prepare a Marginal Costing Statement. ...