Cost Estimation of a Manufacturing Company Name: Business: Date: Economics of One Unit: Manufacturing Company (Only complete if you are making a product, such as a bracelet or beauty product) Economics of One Product Define your product: Selling price per product $ A Cost of goods sold per product (Cost of producing one additional product must include both your labor and supplies.) Labor What value are you placing on your entrepreneurial time per hour? How long does it take to make your product or perform your service (in hours)? Labor cost of goods sold per product = B X C $ B C $ D Raw Materials What is the raw material cost of goods sold per product? Cost of goods sold per product = D + E Gross profit = A F $ E $ F $ G
Name: Business: Date: Startup Costs (These are the items you need to earn your first dollar of sales) What are you estimated start-up costs? Itemize: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Item Where Will you Buy This? Cost Estimated Total Start-up Costs $ List your sources of financing below. Indicate with a check mark whether each source is offering equity, debt, or a gift. Remember you will be starting with $50,000 that you were given from the bank as a loan. You will need to pay back this loan on a monthly basis. Equity (Investment) Debt (Loan) Personal Savings: Relatives: Friends: Investors: Grant: Bank: $50,000 X Other: Gift Total: $ If you receive equity financing, what percentage of ownership will you give up? % (Remember, the more ownership you give up, the less money you will make.) If you receive debt financing, what is the maxium interest rate you will pay? % (Remember, the higher your interest rate, the more amount of money you will pay back. You want a relatively low interest rate, most likely in the single digits.)
Name: Business: Date: Operating Costs Monthly Fixed Costs Monthly Operating Costs include USAIIR: utilities, salaries, advertising, interest, insurance, and rent. In a small business, many operating costs are usually fixed, although a few may be variable, depending on your business. Type of Fixed Costs Monthly Fixed Cost 1. Rent or Mortgage $ 2. Electricity $ 3. Water $ 4. Telephone $ 5. Internet/ TV $ 6. Employee Salaries $ 7. $ 8. $ 9. $ 10. $ 11. $ 12. $ 13. $ 14. $ 15 $ Total Operating Costs $
Sample Monthly Budget: Projected Income Statement for a Manufacturing Company Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Total Products Sold 2 4 6 8 8 16 18 20 8 8 8 6 112 Product Selling Price 30 30 30 30 30 30 30 30 30 30 30 30 30 *Total Sales 60 120 180 240 240 480 540 600 240 240 240 180 3,360 Cost of Goods Sold per Product 17 17 17 17 17 17 17 17 17 17 17 17 17 *Total Cost of Products Sold 34 68 102 136 136 272 306 340 136 136 136 102 1,904 *Gross Profit 26 52 78 104 104 208 234 260 104 104 104 78 1,456 *Total Operating Costs 26 26 26 26 26 26 26 26 26 26 26 26 312 *Profit/(Loss) 0 26 52 78 78 182 208 234 78 78 78 52 1,144 *Taxes (25%) $256 Net Profit: $ 858 *Total Sales = Products Sold x Product Selling Price *Total Cost of Services Sold = Products Sold x Cost of Services Sold per Product *Gross Profit = Total Sales Total Cost of Products Sold *Profit/(Loss) = Gross Profit Operating Costs *Taxes = Profit x 0.25
Monthly Budget: Projected Income Statement for a Manufacturing Company Products Sold Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Total Product Selling Price *Total Sales Cost of Services Sold per Product *Total Cost of Products Sold *Gross Profit *Total Operating Costs *Profit/(Loss) *Taxes (25%) $ Net Profit: $ *Total Sales = Products Sold x Product Selling Price *Total Cost of Services Sold = Products Sold x Cost of Services Sold per Product *Gross Profit = Total Sales Total Cost of Products Sold *Profit/(Loss) = Gross Profit Operating Costs *Taxes = Profit x 0.25
Name: Business: Date: Sample Budgeted Yearly Income Statement for a Manufacturing Business Sales Products Sold for one year 112 Product Selling Price for one $30 product Total Sales for one year $3,360 Total Sales = Products Sold x Products Selling Price Costs Cost of Services Sold per Product $17 Total Cost of Products Sold $1,904 Total Cost of Goods or Services Sold = Products Sold x Cost of Goods or Services Sold per Product Gross Profit $1,456 Gross Profit = Total Sales Total Cost of Goods or Services Sold Total Operating Costs $312 Profit Profit/(Loss) before Taxes $1,144 Profit/(Loss) = Gross Profit Operating Expenses Taxes (25%) $286 Taxes = Profit x 0.25 Net Profit $858 Net Profit = Profit - Taxes Net Profit per Product $7.66 Net Profit per Product = Net Profit Products Sold
Name: Business: Date: Budgeted Yearly Income Statement for a Manufacturing Business Sales Products Sold for one year Product Selling Price for one $ product Total Sales for one year $ Total Sales = Products Sold x Products Selling Price Costs Cost of Services Sold per Product $ Total Cost of Products Sold $ Total Cost of Goods or Services Sold = Products Sold x Cost of Goods or Services Sold per Product Gross Profit $ Gross Profit = Total Sales Total Cost of Goods or Services Sold Total Operating Costs Profit $ Profit/(Loss) before Taxes $ Profit/(Loss) = Gross Profit Operating Expenses Taxes (25%) $ Taxes = Profit x 0.25 Net Profit $ Net Profit = Profit - Taxes Net Profit per Product $ Net Profit per Product = Net Profit Products Sold The rubric for the cost estimation is provided below. Please review this rubric while creating your budget worksheets. If you have any questions, please contact your homeroom teacher.