Question

MGMT 640 GROUP PROJECT to your team has been hired to provide financial analysis for a start-up company, Bobble in Style, n produces customized bobble heads. The bobble heads are made out of less rigid materials and are more true to life more true to life than those of competitors. The company inventors, Mr. and Mrs. Lee, are going to pitch trieir idea to Shark Tank in a few months, but first they need to have a better understanding of the business financials. The Lee's are already creating and selling their product from their home-based office and work area. They know what costs are involved with making the bobble heads on a small scale, but they don't have an understanding of financial figures beyond basic costs. They need you to make sense of various financial figures for them. The Project: There are several financial analysis tasks involved with this project, which are outlined below (#1-8). Once you have worked through each task, you will need to produce a PowerPoint presentation to introduce and highlight your findings. Your PowerPoint presentation should include a title slide, an executive summary slide(s), subsequent slides that illustrate your findings, any additional recommendations that you would like to make, and a conclusion slide. The PowerPoint presentation should be approximately 15-25 slides in length. Include notes in the presentation as needed. You will also need to create a written executive summary (one page in length). Your final submission will include the PowerPoint presentation, the executive summary, and an Excel file with relevant calculations. The specific financial analysis tasks and related information are listed below (#1-8).

The highlighted sections are the ones i need figured out

Answer 1

3 - Cost classification:

A.

Variable cost	(linked to sales volume)		Fixed Cost	(Indirect costs that are necessary for an ongoing concern)
COGS	21000	(35*600)	Laoubr cost	4800	Not the cost in direct production & not linked to sales volume
Advertising	3000		Phone / Internet	1800	Services necessary for day to day operations and fixed
Bank fees	200		Utilities	1200	Services necessary for day to day operations and fixed
shipping	1800		Conference fees	3000
office supplies	900		Travel exp	1200
	26900			12000		38900

B. It is important to distinguish between the variable and the fixed costs for the reasons below.

i) Fixed costs are not controllable for a running business but can be planned and budgeted judiciously.

ii) Variable costs increase with the increasing sales volume so it helps to arrive at a volume that is a breakeven and starts making profits.

iii) The changing dynamics of costs with increasing sales volumes can be understood better.

iv) Fixed cost per unit will exhibit a declining trend with increase in sales volume.

C. Budgeted Income statement

Budgeted income statement
Revenue		51000
COGS		21000
Gross profit		30000
Administrative & other Expenses
Labour		4800
Advertising		3000
Bank fees		200
Phone / Internet		1800
Shipping		1800
utilities		1200
conference		3000
Travel Exp		1200
office supplies		900
		17900
EBITDA		12100
Depreciation Expense		800
EBIT		11300
Interest on Notes Payable		350
EBT		10950
Tax @ 26%		3066
Net Income		7884

7. Break even volume

Variable cost	26900
Fixed cost	12000
Sales volume	299
Break even sales volume	Total fixed cost
	Sale price per unit - variable cost per unit
Sale price per unit	85
Fixed cost	12000
Variable cost per unit	26900/600

8. Contribution Margin

Contribution Margin	Total Sales - Variable cost
	Total Sales
	0.472549
Contribution margin per unit	Sales price per unit - variable cost per unit
	85-40.167
	44.833