Supply Chain Task 1
B1: BUDGETS
The Marketplace simulation helped me realize how complicated and difficult decision making can be when trying to build a company. Among the most important simulation results were utilizing the budgets and pro forma statements. Budgets are beneficial as a financial plan by listing all planned expenses and income. The purpose is to be able to forecast revenues and expenses and create a business model that operates effectively to make sure overhead can be paid. -------------------------------------------------
Top of Form Income Statement | | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Gross Profit | Revenues | 0 | 2,073,055 | 6,888,870 | 8,280,065 | - Rebates | 0 | 63,375 | 204,750 | 238,875 | - Cost of Goods Sold | 0 | 1,607,135 | 4,380,818 | 5,254,248 | = Gross Profit | 0 | 402,545 | 2,303,302 | 2,786,942 | | | | | | | | | | | | | | | | Expenses | Research and Development | 120,000 | 0 | 120,000 | 0 | + Advertising | 0 | 160,352 | 198,598 | 311,897 | + Sales Force Expense | 0 | 166,980 | 249,324 | 283,910 | + Sales Office Expense | 470,000 | 270,000 | 480,000 | 370,000 | + Marketing Research | 0 | 15,000 | 15,000 | 15,000 | + Shipping | 0 | 35,124 | 89,753 | 101,533 | + Inventory Holding Costs | 0 | 0 | 0 | 0 | + Excess Capacity Cost | 0 | 0 | 0 | 0 | + Depreciation | 0 | 45,833 | 45,833 | 45,833 | = Total Expenses | 590,000 | 693,289 | 1,198,508 | 1,128,173 | | | | | | | | | | | | | | | | Operating Profit | -590,000 | -290,744 | 1,104,794 | 1,658,769 | | | | | | | | | | | | | | | | Miscellaneous Income and Expenses | + Other Income | 0 | 0 | 0 | 0 | - Other Expenses | 0 | 0 | 0 | 0 | = Earnings Before Interest and Taxes | -590,000 | -290,744 | 1,104,794 | 1,658,769 | | | | | | | | | | | | | | | | + Interest Income | 3,600 | 450 | 2,250 | 3,000 | - Interest Charges | 0 | 0 | 0 | 0 | = Income Before
The Marketplace simulation helped me realize how complicated and difficult decision making can be when trying to build a company. Among the most important simulation results were utilizing the budgets and pro forma statements. Budgets are beneficial as a financial plan by listing all planned expenses and income. The purpose is to be able to forecast revenues and expenses and create a business model that operates effectively to make sure overhead can be paid. -------------------------------------------------
Top of Form Income Statement | | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Gross Profit | Revenues | 0 | 2,073,055 | 6,888,870 | 8,280,065 | - Rebates | 0 | 63,375 | 204,750 | 238,875 | - Cost of Goods Sold | 0 | 1,607,135 | 4,380,818 | 5,254,248 | = Gross Profit | 0 | 402,545 | 2,303,302 | 2,786,942 | | | | | | | | | | | | | | | | Expenses | Research and Development | 120,000 | 0 | 120,000 | 0 | + Advertising | 0 | 160,352 | 198,598 | 311,897 | + Sales Force Expense | 0 | 166,980 | 249,324 | 283,910 | + Sales Office Expense | 470,000 | 270,000 | 480,000 | 370,000 | + Marketing Research | 0 | 15,000 | 15,000 | 15,000 | + Shipping | 0 | 35,124 | 89,753 | 101,533 | + Inventory Holding Costs | 0 | 0 | 0 | 0 | + Excess Capacity Cost | 0 | 0 | 0 | 0 | + Depreciation | 0 | 45,833 | 45,833 | 45,833 | = Total Expenses | 590,000 | 693,289 | 1,198,508 | 1,128,173 | | | | | | | | | | | | | | | | Operating Profit | -590,000 | -290,744 | 1,104,794 | 1,658,769 | | | | | | | | | | | | | | | | Miscellaneous Income and Expenses | + Other Income | 0 | 0 | 0 | 0 | - Other Expenses | 0 | 0 | 0 | 0 | = Earnings Before Interest and Taxes | -590,000 | -290,744 | 1,104,794 | 1,658,769 | | | | | | | | | | | | | | | | + Interest Income | 3,600 | 450 | 2,250 | 3,000 | - Interest Charges | 0 | 0 | 0 | 0 | = Income Before
References: Heizer, J., & Render, B., (2010). Operations Management (10th ed.). Prentice Hall