The Budget Report for the Company Sandlicious - Coursework Example

The budget report for the company Sandlicious has been conducted by Oscar. It has been prepared for the management accounting module, to be shown to Nnamdi Obiosa. Its main purpose is to show the budget information for one year of the newly-launched company Sandlicious. Salacious is a Limited Liability Company that produces quality handmade sandwiches. This report will cover the financial standing of the company, general information, and projected earnings and spending in twelve months. The investor's start-up capital would be £60 000 which comes from their savings.   2. Product Description   2.1 Product   Sandlicious would produce quality handmade sandwiches, which are mainly focused on this single product. The company wants to project an image that Sandlicious is a small local bakery that provides excellent service and quality food. It is a fast-moving consumer food product. The ingredients of the product include meat, wheat, and bread, and can be considered a substitute for lunch. It is very handy and can be quickly taken along by people who are on the go. The sandwich is fresh all the time and closing inventory would be kept low to minimize spoilage. The cost of producing each sandwich is estimated at £3.05. Each sandwich would be sold at 5 GBP.     2.2 Location   The bakery/shop will be located on Marylebone High Street in central London since this is a busy area. Many people live and work around this area;  hence, the reason for choosing the location. Foot traffic is also high, which means a lot of people can easily drop by and buy a sandwich. Market research conducted revealed that there are very few bakeries around that area. Furthermore, Sandlicious is unique because the sandwich is handmade and has a competitive price. Since Sandlicious is not a franchise, it presents a more special type of sandwich that offers varieties and very friendly service. The market would perceive the product as fresh and at the same time affordable. It is expected that loyal customers will be acquired as the bakery provides consistent quality service.   2.3   Marketing and Promotion   Sandlicious is aware of the importance of marketing to gain customers which would result in profitability. Sandlicious would be raising the number of units produced monthly in the hope that more sales would be generated. The company’s marketing campaign would emphasize advertising beginning with a £1000 budget for the first two months. Distribution of flyers is part of the marketing budget. In the succeeding months, a budget for advertising between £150-300 would be spent to reinforce the product on the market. It is also expected that sales will increase through word of mouth as satisfied customers tell other people about our products.   3. Financing   3.1 Payment   All the payments should be by cash or card at the time of purchase. The product can be bought at the store, and the company has not yet considered delivery service at this point. A variety of sandwiches would be offered to the market plus a special for the day. Sandlicious can also have a business-to-business partnership with other establishments but the main revenue would not be derived from such sales. The customers can choose from whatever is offered for a given day.     3.2 Costs   The business operations of   Sandlicious would involve several costs such as labor costs and overhead costs. Sandlicious must hire skilled workers who can prepare sandwiches. There would be a need for two workers who would work for eight hours a day, 20 days a month. The salary of a worker is £7 per hour, which is above the minimum wage. In a month, the fixed costs for two workers would be £2,240. To further minimize additional salary costs, the owners would act as cashiers and supervisors. Instead of receiving a monthly salary, they would just get their share of the monthly profit. Aside from labor costs, overhead costs are part of the business. The monthly rental would cost £3200 since it is in a prime location. Total variable overhead amounts to 80 pounds per month. The costs for utilities for the first few months would be slightly lower than the succeeding months since production is not yet on full blast. Total overhead costs for a month which includes advertising, depreciation, and utilities would amount to an average of £3700 a month.   3.3 Additional Financing   Sandlicious needs capital investment in several appliances and equipment. An oven would be purchased for £ 3000. The oven would be purchased from a supplier using financing terms for one year. The monthly payments are interest-free but there is a need for a 25% down payment. The monthly payment would only be £ 195. The fridge would cost £1750 and would be paid in cash. The cooking utensils costs £1750 which are also paid for in cash. The only financing involved is the monthly payment for the oven which can be covered by sales.

The margin of safety would then be 54.28%. Through constant supervision of owners and sound financial management, Sandlicious can become a successful business.

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