Fiscal Plan and Break-Even Analysis
Name
Course Name and Number
Professor
Date of Submission
Break-Even Analysis
|
Break Down Computation for 6 Calendar months Ended June 2013 |
||||
|
In Dollars |
Unit of measurements |
Per Unit |
In Percentage |
|
|
Gross saless ( invoiced ) |
$ 562,500.00 |
8500 |
$ 66.18* |
100 % |
|
Variable Cost |
$ 84,170.00 |
8500 |
$ 9.90 |
14.96 % |
|
Contribution Margin |
$ 478,330.00 |
8500 |
$ 56.28 |
85.04 % |
|
Fixed Cost |
$ 35,363.00 |
|||
|
Net Income |
$ 442,967.00 |
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In calculation of the Break-Even Point, there are two results that require analysis. These are the Break-Even Gross saless in Unit of measurements or Volume and Break-Even Gross saless in Dollars. In Figure 1, the sums listed are derived from Net income and Loss Forecast subdivision of the excel file. All sums are prognosiss from January to June of 2013 including estimated set-up costs.
Figure 1. Interrupt Down Computation for 6 Calendar months Ended June
*Sales Price per Unit= Original Price x ( 100 % + Mark-Up Percentage )
= $ 57.55 x 1.15
=$ 66.18
|
Fixed Costss |
|||
|
Wages and rewards |
$ 18,000.00 |
Repairs and care |
$ 240.00 |
|
Ad |
$ 1,200.00 |
Marketing study |
$ 300.00 |
|
Rent |
$ 1,800.00 |
Design and testing |
$ 400.00 |
|
Equipment hire/lease |
$ 5,000.00 |
Patents |
$ 150.00 |
|
Depreciation |
$ 100.00 |
Copyright enrollment |
$ 120.00 |
|
Electricity and gas |
$ 1,000.00 |
Recruitment and choice |
$ 200.00 |
|
Insurance |
$ 1,200.00 |
Water measures |
$ 200.00 |
|
Legal fees |
$ 300.00 |
Construction |
$ 3,000.00 |
|
Transport/courier costs |
$ 540.00 |
Office set up |
$ 1,000.00 |
|
Postage, telephone and facsimile |
$ 190.00 |
Distribution |
$ 264.00 |
|
Stationery |
$ 159.00 |
Entire Fixed Cost |
$ 35,363.00 |
Figure 2. Composition of Entire Fixed Costss
The company incurred entire fixed costs of $ 35,363.00 for its iScent Alarm Clocks from January to June of 2013. Variable cost is $ 9.9 per unit which is 14.96 % of the gross revenues monetary value per unit. The iScent Alarm Clock has an original monetary value of $ 57.55. Given the proposed mark-up monetary value of 15 % , the new monetary value of iScent Alarm Clock is $ 66.18 per unit. Hence, the company will sell an iScent Alarm Clock for $ 57.55 for retail merchants and jobbers while $ 66.18 for every individual purchase of clients. Furthermore, the mark-up per centum of 15 % can cover unforeseen or unanticipated product-related costs that may originate in future. Using informations provided in Figure 1, below is the calculation of break-even point in units and in dollars.
|
Break-Even Point in Units = |
Entire Fixed Cost |
|||
|
Gross saless Price per Unit – Variable Cost Per Unit |
||||
|
Break-Even Point in Units = |
$ 35,363.00 |
|||
|
$ 66.18 – $ 9.9 |
||||
|
Break-Even Point in Units = |
628.34 units |
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|
Break-Even Point in Dollars = |
$ 41,583.57 |
|||
|
( $ 628.34 units x $ 66.18 ) |
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Figure 3. Break-Even Point Calculation
In Figure 3, the break-even points are 628.34 units and $ 41,583.57. It means that the company must sell 628.34 units of iScent Alarm Clock within six months to retrieve the cost of bring forthing those alarm redstem storksbills or to merely break-even. To farther explain ; if the company produced and sold 628.34 pieces of iScent Alarm Clock, each of these units will cover the fringy or variable costs of $ 84,170.00 every bit good as all associated fixed costs of $ 35,363.00. If the company sells 628.34 iScent Alarm Clocks, so it will non see a loss. Upon selling more than 628.34 units, all fixed costs have been settled, and each unit contributes to net incomes by the part border. Hence, if the company sells more than 628.34 units, it will be considered as income for the company. The Break-Even Point in Dollars of $ 41,583.57 is merely the monetary value of 628.34 units when sold.
|
Unit of measurements |
Gross saless Gross |
Variable Cost |
Contribution Margin |
Fixed Cost |
Entire Cost |
Net Income |
|
100 |
6618 |
990 |
5628 |
35,363.00 |
36,353.00 |
-29,735.00 |
|
200 |
13236 |
1980 |
11256 |
35,363.00 |
37,343.00 |
-24,107.00 |
|
300 |
19854 |
2970 |
16884 |
35,363.00 |
38,333.00 |
-18,479.00 |
|
400 |
26472 |
3960 |
22512 |
35,363.00 |
39,323.00 |
-12,851.00 |
|
500 |
33090 |
4950 |
28140 |
35,363.00 |
40,313.00 |
-7,223.00 |
|
600 |
39708 |
5940 |
33768 |
35,363.00 |
41,303.00 |
-1,595.00 |
|
628.34 |
41583.541 |
6220.566 |
35363 |
35,363.00 |
41,583.57 |
0.0 |
|
700 |
46326 |
6930 |
39396 |
35,363.00 |
42,293.00 |
4,033.00 |
|
800 |
52944 |
7920 |
45024 |
35,363.00 |
43,283.00 |
9,661.00 |
|
900 |
59562 |
8910 |
50652 |
35,363.00 |
44,273.00 |
15,289.00 |
|
1000 |
66180 |
9900 |
56280 |
35,363.00 |
45,263.00 |
20,917.00 |
Figure 4. Tabulation of Gross saless Revenue, Variable Cost, Contribution Margin, Fixed Cost, Total Cost and Net Income
Figure 5. Chart Summary of Break-Even Points
Figure 4 illustrates the sums of Gross saless Revenue, Variable Cost, Contribution Margin, Fixed Cost, Total Cost and Net Income upon selling units of iScent Alarm Clocks in different degrees. In analysis of the tabular array, the company incurs a negative sum or losingss when it sells less than the break-even units of 628.34. As shown in Figure 4, the company will incur a loss of $ 1,595.00 when it sells 600 units merely. On the other manus, anything sold beyond 628.34 units is automatically a net income for the company. In analysis of the break-even sums, Gross saless Revenue and Entire Cost runs to $ 41,583.60 and Contribution Margin and Fixed Cost runs to $ 35,363. Last, there is no income and loss on the break-even units of 628.34. Figure 5 shows the graphical reading of the stoping points of Gross saless Revenue, Total Cost and Net Income in relation to units sold.
Forecasting Techniques
The company has used three calculating techniques viz. ; Profit and Loss Forecast ( Figure 6 ) , Cash Flow Projection ( Figure 7 ) and Balance Sheet Forecast.
|
Net income and Loss Forecast |
|||||||
|
January |
February |
March |
April |
MAY |
June |
Sum |
|
|
Gross saless |
|||||||
|
Gross saless ( invoiced ) |
$ 69,000.00 |
$ 76,000.00 |
$ 85,000.00 |
$ 99,300.00 |
$ 108,200.00 |
$ 125,000.00 |
$ 562,500.00 |
|
Cost of goods sold |
$ 10,300.00 |
$ 12,100.00 |
$ 14,470.00 |
$ 15,800.00 |
$ 15,500.00 |
$ 16,000.00 |
$ 84,170.00 |
|
Gross net income |
$ 58,700.00 |
$ 63,900.00 |
$ 70,530.00 |
$ 90,900.00 |
$ 92,700.00 |
$ 109,000.00 |
$ 478,330.00 |
|
Expenses |
|||||||
|
Wages and rewards |
$ 1,800.00 |
$ 2,200.00 |
$ 2,500.00 |
$ 3,500.00 |
$ 3,900.00 |
$ 4,100.00 |
$ 18,000.00 |
|
Ad |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 1,200.00 |
|
Rent |
$ 300.00 |
$ 300.00 |
$ 300.00 |
$ 300.00 |
$ 300.00 |
$ 300.00 |
$ 1,800.00 |
|
Equipment hire/lease |
$ 5,000.00 |
$ 5,000.00 |
|||||
|
Depreciation |
$ 0.00 |
$ 20.00 |
$ 20.00 |
$ 20.00 |
$ 20.00 |
$ 20.00 |
$ 100.00 |
|
Electricity and gas |
$ 200.00 |
$ 120.00 |
$ 150.00 |
$ 230.00 |
$ 130.00 |
$ 170.00 |
$ 1,000.00 |
|
Insurance |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 200.00 |
$ 1,200.00 |
|
Legal fees |
$ 50.00 |
$ 50.00 |
$ 50.00 |
$ 50.00 |
$ 50.00 |
$ 50.00 |
$ 300.00 |
|
Transport/courier costs |
$ 120.00 |
$ 90.00 |
$ 68.00 |
$ 85.00 |
$ 95.00 |
$ 82.00 |
$ 540.00 |
|
Postage, telephone and facsimile |
$ 30.00 |
$ 31.00 |
$ 23.00 |
$ 28.00 |
$ 48.00 |
$ 30.00 |
$ 190.00 |
|
Stationery |
$ 20.00 |
$ 23.00 |
$ 24.00 |
$ 30.00 |
$ 31.00 |
$ 31.00 |
$ 159.00 |
|
Repairs and care |
$ 40.00 |
$ 34.00 |
$ 27.00 |
$ 61.00 |
$ 20.00 |
$ 58.00 |
$ 240.00 |
|
Marketing study |
$ 300.00 |
$ 300.00 |
|||||
|
Design and testing |
$ 400.00 |
$ 400.00 |
|||||
|
Patents |
$ 150.00 |
$ 150.00 |
|||||
|
Copyright enrollment |
$ 120.00 |
$ 120.00 |
|||||
|
Recruitment and choice |
$ 200.00 |
$ 200.00 |
|||||
|
Water measures |
$ 44.00 |
$ 28.00 |
$ 21.00 |
$ 34.00 |
$ 43.00 |
$ 30.00 |
$ 200.00 |
|
Construction |
$ 3,000.00 |
$ 3,000.00 |
|||||
|
Office set up |
$ 1,000.00 |
$ 1,000.00 |
|||||
|
Distribution |
$ 50.00 |
$ 30.00 |
$ 49.00 |
$ 61.00 |
$ 40.00 |
$ 34.00 |
$ 264.00 |
|
Entire |
$ 13,224.00 |
$ 3,326.00 |
$ 3,632.00 |
$ 4,799.00 |
$ 5,077.00 |
$ 5,305.00 |
$ 35,363.00 |
|
Consequence |
|||||||
|
Net net income |
$ 45,476.00 |
$ 60,574.00 |
$ 66,898.00 |
$ 86,101.00 |
$ 87,623.00 |
$ 103,695.00 |
$ 442,967.00 |
|
Gross net income border |
85 % |
84 % |
83 % |
92 % |
86 % |
87 % |
85 % |
|
Net net income border |
66 % |
80 % |
79 % |
87 % |
81 % |
83 % |
79 % |
Figure 6. Net income and Loss Forecast
|
Cash Flow Projection for iScent |
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|
January |
February |
March |
April |
May |
June |
Sums |
|
|
Cash Balance – Get downing |
$ 50,000 |
$ 64,521 |
$ 78,585 |
$ 102,676 |
$ 127,915 |
$ 133,955 |
|
|
Cash Inflow |
|||||||
|
Operating gross |
|||||||
|
Cash grosss from clients |
$ 25,000 |
$ 26,300 |
$ 24,800 |
$ 26,540 |
$ 21,050 |
$ 24,760 |
$ 148,450 |
|
Collection of receivables |
$ 2,745 |
$ 3,102 |
$ 3,258 |
$ 3,498 |
$ 3,795 |
$ 4,046 |
$ 20,444 |
|
Other runing gross received |
$ 0 |
$ 0 |
$ 0 |
$ 0 |
$ 0 |
$ 0 |
$ 0 |
|
Entire Operating Gross |
$ 27,745 |
$ 29,402 |
$ 28,058 |
$ 30,038 |
$ 24,845 |
$ 28,806 |
$ 168,894 |
|
Other Beginnings of Cash Inflows |
|||||||
|
Returns from sale of assets |
$ 0 |
||||||
|
Fundss borrowed |
$ 20,000 |
$ 20,000 |
|||||
|
Tax refund/rebates |
$ 0 |
||||||
|
Other beginnings of hard currency influx |
$ 0 |
||||||
|
Entire other hard currency influxs |
$ 0 |
$ 20,000 |
$ 0 |
$ 0 |
$ 0 |
$ 0 |
$ 20,000 |
|
Entire monthly hard currency influx |
$ 27,745 |
$ 49,402 |
$ 28,058 |
$ 30,038 |
$ 24,845 |
$ 28,806 |
$ 188,894 |
|
Cash Outflow |
|||||||
|
Inventory ( Stock ) |
|||||||
|
Stock purchases |
$ 12,012 |
$ 13,728 |
$ 25,740 |
||||
|
Other Cost of Goods |
$ 0 |
||||||
|
Entire Cost of Goods |
$ 0 |
$ 12,012 |
$ 0 |
$ 0 |
$ 13,728 |
$ 0 |
$ 25,740 |
|
Fixed Expenses |
|||||||
|
Wages and rewards |
$ 1,800 |
$ 2,200 |
$ 2,500 |
$ 3,500 |
$ 3,900 |
$ 4,100 |
$ 18,000 |
|
Ad |
$ 200 |
$ 200 |
$ 200 |
$ 200 |
$ 200 |
$ 200 |
$ 1,200 |
|
Rent |
$ 300 |
$ 300 |
$ 300 |
$ 300 |
$ 300 |
$ 300 |
$ 1,800 |
|
Equipment hire/lease |
$ 5,000 |
$ 5,000 |
|||||
|
Depreciation |
$ 0 |
$ 20 |
$ 20 |
$ 20 |
$ 20 |
$ 20 |
$ 100 |
|
Electricity and gas |
$ 200 |
$ 120 |
$ 150 |
$ 230 |
$ 130 |
$ 170 |
$ 1,000 |
|
Insurance |
$ 200 |
$ 200 |
$ 200 |
$ 200 |
$ 200 |
$ 200 |
$ 1,200 |
|
Legal fees |
$ 50 |
$ 50 |
$ 50 |
$ 50 |
$ 50 |
$ 50 |
$ 300 |
|
Transport/courier costs |
$ 120 |
$ 90 |
$ 68 |
$ 85 |
$ 95 |
$ 82 |
$ 540 |
|
Postage, telephone and facsimile |
$ 30 |
$ 31 |
$ 23 |
$ 28 |
$ 48 |
$ 30 |
$ 190 |
|
Stationery |
$ 20 |
$ 23 |
$ 24 |
$ 30 |
$ 31 |
$ 31 |
$ 159 |
|
Repairs and care |
$ 40 |
$ 34 |
$ 27 |
$ 61 |
$ 20 |
$ 58 |
$ 240 |
|
Marketing study |
$ 300 |
$ 300 |
|||||
|
Design and testing |
$ 400 |
$ 400 |
|||||
|
Patents |
$ 150 |
$ 150 |
|||||
|
Copyright enrollment |
$ 120 |
$ 120 |
|||||
|
Recruitment and choice |
$ 200 |
$ 200 |
|||||
|
Water measures |
$ 44 |
$ 28 |
$ 21 |
$ 34 |
$ 43 |
$ 30 |
$ 200 |
|
Construction |
$ 3,000 |
$ 3,000 |
|||||
|
Office set up |
$ 1,000 |
$ 1,000 |
|||||
|
Distribution |
$ 50 |
$ 30 |
$ 49 |
$ 61 |
$ 40 |
$ 34 |
$ 264 |
|
Entire Fixed Expenses |
$ 13,224 |
$ 3,326 |
$ 3,632 |
$ 4,799 |
$ 5,077 |
$ 5,305 |
$ 35,363 |
|
Other Expenses |
|||||||
|
Bank Interest |
$ 0 |
||||||
|
GST |
$ 335 |
$ 435 |
$ 770 |
||||
|
Entire Other Expenses |
$ 0 |
$ 0 |
$ 335 |
$ 0 |
$ 0 |
$ 435 |
$ 770 |
|
Other Cash Outflows |
|||||||
|
Purchase of assets |
$ 20,000 |
$ 20,000 |
|||||
|
One-off bank fees |
$ 0 |
||||||
|
Principal Loan refunds |
$ 0 |
||||||
|
Payments to the owner/s |
$ 0 |
||||||
|
Investing of excess financess. |
$ 0 |
||||||
|
Other hard currency influxs |
$ 0 |
||||||
|
Entire Other Cash Outflows |
$ 0 |
$ 20,000 |
$ 0 |
$ 0 |
$ 0 |
$ 0 |
$ 20,000 |
|
Entire Monthly Cash Outflow |
$ 13,224 |
$ 35,338 |
$ 3,967 |
$ 4,799 |
$ 18,805 |
$ 5,740 |
$ 81,873 |
|
Difference of Inflow and Outflow |
$ 14,521 |
$ 14,064 |
$ 24,091 |
$ 25,239 |
$ 6,040 |
$ 23,066 |
$ 107,021 |
|
Cash balance at the terminal of each month |
$ 64,521 |
$ 78,585 |
$ 102,676 |
$ 127,915 |
$ 133,955 |
$ 157,021 |
$ 664,673 |
Figure 7. Cash Flow Projection for iScent
|
Balance Sheet Projection for December 31, 2014 |
||||
|
Assetss |
Liabilitiess and Equity |
|||
|
Current Assetss |
Current Liabilitiess |
|||
|
Cash in bank |
$ 307,751.00 |
Histories collectible |
$ 33,120 |
|
|
Histories receivable |
$ 61,430.00 |
Interest payable |
6,700 |
|
|
Inventory |
$ 42,100.00 |
Taxs collectible |
3,200 |
|
|
Prepaid disbursals |
$ 400.00 |
Notes, short-run ( due within 12 months ) |
20,000 |
|
|
Other current assets |
1,350 |
Current portion, long-run debt |
12,000 |
|
|
Entire Current Assets |
$ 413,031 |
Other current liabilities |
1,4 |
