Purchase Solution

Model Building of Startup Company Projections

Not what you're looking for?

Ask Custom Question

You are the owner of a new startup company which is going to sell sound systems. You have approached the local bank for funding and they want a statement showing your projected sales, expenses and profits for the first year:
Unit sales XXX
Price XXX
Variable cost/Unit XXX

Projected Income Statement
Sales (dollars) XXX
Manufacturing cost XXX
Gross margin XXX
Marketing cost XXX
Profit before tax XXX

The details of your business plan include the following:
The selling price of each sound system is $1,600.
It will cost $300 to manufacture each sound system plus there will be fixed costs of $80,000 per year.
Marketing costs are projected to be 10% of dollar sales plus $10,000 in fixed costs per year.
You initially estimate that you will sell 100 units in the first year.

1. Identify the decision variables, exogenous variables, performance measure and intermediate variables.
2. Define the relationships between the variables identified in part 1.
3. Calculate the break-even point.

Purchase this Solution

Solution Summary

This solution analyzes the impact of variables and the related model of a manufacturing startup company.

Solution Preview

1.
Decision variable: Price
Exogenous variables: Unit sales, fixed costs (both manufacturing and marketing), variable cost/unit
Performance ...

Purchase this Solution


Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Introduction to Finance

This quiz test introductory finance topics.