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BAEP 423, Autry

Midterm Finance Sheet (5 pts total)

Student Name: Joshua Park_____________ Student ID:


3700034452___________________
You are running a Skate Board Assembly Plant. Complete the finances
below. Do NOT add anything. Do not make it more complex. Pay careful
attention to UNITS:
Equipment and Facilities:
Tools and Benches: $18,000 (depreciate evenly over 3 years at $6,000
per year)
Facility Rent: $4,000/month
Inputs to Production of a Board:
Deck: $20
Wheels: $25
Bearings: $10
Trucks: $15
Grip Tape: $5
Labor Costs
Assembly labor: $10/ board
Admin labor, including taxes: $10,000/month
Sales commission: $5/ board
Advertising: $1,000/month
Insurance: $1,500/year
6 months Startup Costs / Seed Investment Requirements (table 1
1pt)
(see sales quantities on page 3)
Item
Tools and Benches

Estimated Cost
$18,000

Rent
Insurance
Advertising
Admin Labor & Taxes
Variable Costs

$24,000
$1,500
$6,000
$60,000
$270,000

1
1

Assumptions1
Depreciates $6,000
per yr
$4,000 per month
$1,500 per year
$1,000 per month
$10,000 per month
$90 * 3,000 units

Total Startup Cost


$379,500
Contingency (20%)
$75,900
Total with Contingency $455,400
Fixed Costs Per Year (table 2 5 pt)
Item

Cost

Rent
Advertising
Insurance
Admin Labor & Taxes
Tools and Equipment

$48,000
$12,000
$1,500
$120,000
$6,000

Total Fixed Costs

$187,500

Assumptions
$4,000 per month
$1,000 per month
$10,000 per month
$18,000 depreciates
3yr

Name: Joshua Park_______________________________________


Variable Costs Per Unit (table 3 - 5 pt)
Item
Deck
Wheels
Bearings
Trucks
Grip Tape
Assembly Labor
Sales Commission

Total Variable
Costs/Unit

Cost
$20
$25
$10
$15
$5
$10
$5

Per
Per
Per
Per
Per
Per
Per

$90

Assumptions
Board
Board
Board
Board
Board
Board
Board

Note: Pay attention to the UNITS (fixed cost per YEAR and Variable costs
per Unit).

Name: Joshua Park_______________________________________


Sales start at 500 units per month. Sales in year 2 are 20% higher than
year 1. Sales in year 3 increase by 1,800 units over year 2.
Price/board you sell to dealers will be: $110 in year 1. $120 in years 2
and 3.
Net Cash Flow Year 1 (table 4 - 5pt) pay attention to your units!
Item
Value
Assumptions
Unit Sale Price
$110
Total Variable Cost/Unit $90
From table 3
Profit / Unit
$20
Unit Price Var. cost/unit
Unit Sales Volume /Year6,000
500 units per month
Annual Gross Profit
$120,000
Profit/unit X Unit Sales
Vol.
Fixed Costs Per Year
$187,500
From table 2
Net Cash Flow Per Year -$67,500
Gross Profit-Fixed Costs
Net Cash Flow Year 2 (table 5 - 5pt)
Item
Value
Unit Sale Price
$120
Total Variable Cost/Unit $90
Profit / Unit
$30
Unit Sales Volume /Year$7,200
Annual Gross Profit
$216,000
Fixed Costs Per Year
$187,500
Net Cash Flow Per Year $28,500
Net Cash Flow Year 3 (table 6 - 5pt)
Item
Value
Unit Sale Price
$120
Total Variable Cost/Unit $90
Profit / Unit
$30
Unit Sales Volume /Year9,000
Annual Gross Profit
$270,000
Fixed Costs Per Year
$187,500
Net Cash Flow Per Year $82,500

Assumptions
Increase of $10
From table 3
Unit Price Var. cost/unit
20$ higher than yr 1
Profit/unit X Unit Sales
Vol.
From table 2
Gross Profit-Fixed Costs
Assumptions
Same as yr 2
From table 3
Unit Price Var. cost/unit
Profit/unit X Unit Sales
Vol.
From table 2
Gross Profit-Fixed Costs

Break Even and Payback: (circle correct answer 10 pts)


In which year will you have reached Breakeven?
1, 2, 3, After year 3, Never

Break even in YEAR 2


In which year will you have reached Payback of your startup costs?
1, 2, 3, After year 3, Never
Payback of your startup costs AFTER YEAR 3