FINANCIAL FEASIBILITY

Assumptions:
Capital expenditure: 3 % of Revenue
Expected sales 80 % of total units in a year based on questionnaire filled by the
potential customers.
Total number of potato chips products sold in a year based on previous data = 30
million
Product information:
Number of units produced = 5 million
Selling price = 10
Cost price 6.5 (assumed)
Overhead cost = 2.5 million (assumed)

Projected Financial Performance

Sales (@ 10 per unit)

50000000*

Less Variable expenses:

CGS (@ 6.5 per unit)

32500000**

Contribution Margin

17500000***

Less Fixed expenses:

Overhead cost

2500000

Capital expenditure (3% of sales)

1500000****

Net Operating Income

13500000*****

Working Notes:
* Number of Units Produced * Selling Price = Sales
5000000

10

50000000

** Number of Units Produced * Cost Price = CGS

5000000

***

6.5

32500000

Sales CGS

Contribution Margin

50000000 32500000

17500000

**** Capital expenditure (3% of sales)

3% of 50000000

1500000

***** Contribution Margin - Fixed expenses = Net operating Income

17500000

4000000

13500000

Requirement for success analysis:

Break even analysis

Expenses
Contribution Margin per unit

4000000

3.5

1142857 Units

* Contribution Margin per unit = Selling price Variable per unit

Market Share

10

3.5 per unit

Company SalesUnits
Industry Salesunits

4000000
30000000

6.5

13.3%

So if Coca-cola can able to sell its expected sales unit of FUNKIES which is 80 %
of units produced in one year then they can achieve 13.3% of market share.