Question

Pro Forma Income by Month Teal Month 2 Month 3 Month 4 Month Month 6 Cost of oods sold (15) Total COG: Gross Profit-Tot Sales Tor COGS Operating Expenses: Rent/Mort Start Up Costs Total Operating Exp: Net Operating Profit Gross Profit - Tot Operating Exp Recurring Expenses 5000 Sales Projections for 6 months Period Revenue Month 1 $14,000 Month 2 $15.000 Month 3 $16.000 Month 4 $17.000 Month 5 $18.000 $20.000 Months Start Up Costs Advertising Equipment Supplies Incorporation costs Total Start up Costs: 12000 25000 10000 3000) 50000 What month does the business begin having an operating profit? How much financing is needed for the first 6 months? The price per unit is $100. What is the breakeven amount that needs to be sold for the year? By month? Breakeven = Fixed costs/(Price - COGS)

Answer 1

	Month 1	month 2	month 3	month 4	month 5	Month 6	Total
Sales	14000	15000	16000	17000	18000	20000	100000
Other
total sales	14000	15000	16000	17000	18000	20000	100000
Cost of goods sold(15%)	2100	2250	2400	2550	2700	3000	15000
Variable labour (20%)	2800	3000	3200	3400	3600	4000	20000
Total cost of goods	4900	5250	5600	5950	6300	7000	35000
Gross profit	9100	9750	10400	11050	11700	13000	65000
Operating expenses:
Rent	5000	5000	5000	5000	5000	5000	30000
Payroll	7000	7000	7000	7000	7000	7000	42000
Payroll tax	900	900	900	900	900	900	5400
Advertising	500	500	500	500	500	500	3000
Supplies	400	400	400	400	400	400	2400
Utilities	300	300	300	300	300	300	1800
Insurance	150	150	150	150	150	150	900
Misc
Depreciation*(N1)
Startup cost	50000						50000
total operating cost	64250	14250	14250	14250	14250	14250	(-135500)
Net profit	(-55150)	(-4500)	(-3850)	(-3200)	(-2550)	(-1250)	(-70500)

N1) depreciation cannot be calculated as there is no given data about the life of the business

1) The business will have not have operating profit in any of the the 6 months above 6 months the business will have operating profit as sales increase

2) finance needed for the 6 month = total operating profit = $135500

3) Break even units = fixed cost / (price - COGS)

COGS= selling price * cost of goods cost %= 100*15%= $15

Breakeven units = 135500/(100-15)= 1594 units

The business should sell 1594units to reach breakeven point

By month :

Month 1= 64250/85= 756 units

Month 2 - 6 = (14250/85)*5 = 838 units

Per month from 2 - 6 = 14250/85= 168 units