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Task 1 – Sales, Cost and Selling Price calculations
Part 1 - Sales
From the above table of sales budget for Res-Robo Plc the expected monthly sale of Pizzas in Manchester, UK is considered to be £ 138,600.00. The expected numerical figure for annual Pizza sales is further calculated as £ 1,663,200.00. In order to calculate the overall numerical sales value of Pizza, it is expected that sales value shall remain uniform throughout the year. Furthermore, no changes in sales value shall be expected owing to seasonality or seasonal changes. Therefore, no major amendments are presented for determining seasonality in the sales values of Pizza by Res-Robo Plc in Manchester, UK.
The adherence to fixed costs and fixed costs per pizza is further deemed to be an important metric for establishing a harmonious business plan for Res-Robo Plc in Manchester, UK. In order to further determine fixed costs of business, primary adherence to monthly rent is needed to be prioritised. The expected monthly rental expenses for the premises for conducting business activities are valued at £1,950 per month (rightmove.co.uk, 2022). Further components of fixed costs involving staffing costs and overheads are mentioned briefly as follows. The overall price per pizza is expected to be £ 550 for all the months.
The primary assumption for staffing costs comprises two main categories involving the salary of managers and hourly wage rate of operational staff. Manager's salary is expected to be £ 1500 per week, while the hourly wage rate of operational staff is considered to be £ 8.5 per hour. All the operational staff and managing staff hired are above the age limit of 25 years. The secondary adherence of staffing costs further consists of stipulating an 8-hour working schedule throughout the week and a total number of 10 staff are being hired to cater to daily business needs. The additional adherence to overhead costs shall further consist of an industry benchmark of 20% value on sales (freshbooks.com, 2022). The following tabulated demonstration further portrays the overall fixed costs and fixed costs per pizza.
From the above table of fixed costs and fixed costs per pizza, the expected total fixed costs are numerically calculated as £ 464,640.00 and £ 139.68 respectively.
The third key attribute of the business plan for Res-Robo Plc largely consists of the variable costs and variable costs per pizza. In order to articulate variable costs of the business plan for Res-Robo Plc, the primary assumption considered are the various types of pizzas needed to be sold. The various types of pizzas shall further consist of large, medium and small pizzas where 8, 6 and 4 slices respectively shall be offered to customers. The expected variable cost per pizza is slated to be £ 2.00 per pizza (forbes.com, 2017). The additional variable cost, which shall be incurred includes the robot processing and maintenance costs of £ 5 per pizza. The following is a tabulated demonstration of the annual variable costs for Res-Robo Plc.
From the above table of variable costs and variable cost per pizza, the expected variable costs are numerically calculated as £ 23,284.80, while the variable cost per pizza has been calculated as £ 7.00.
From the above table of total sales price with a markup approach, a 25% markup is considered, which yields a sales price of £ 609,906.00 and sales price per pizza is slated to be £183.35.
The selling prices employed by competitors are further deemed to be a vital component of the business plan prospects for Res-Robo Plc. Main competitors have been identified as Bella Italia, easyPizza and PizzaExpress respectively. The selling price per Pizza of Bella Italia, EasyPizza and PizzaExpress further consists of numerical figures of £ 6, £ 4 and £ 5 respectively. Hence, sales price per Pizza of £ 4.5 shall be employed by concerned management of Res-Robo-Plc to ensure parity and harmony with higher customer attraction and orientation.
Revised Cash Budget
In order to articulate costs for direct sales to suppliers, variable costs are expected to increase by 20%, while fixed costs are expected to increase by 15% respectively.
From the above table of revised cash budget, expected net cash flow is calculated as £ 230,601.00. The main ideology associated with the revision of cash budget is mainly focused on generating incremental cash by Res-Robo-Plc.
A) Introduction to Res-Robo plc and its local competitors
The business idea of Res-Robo plc is vast as the demand for the products of the organization will increase day by day in the UK market. Basically, the organization is going to make robots that are going to be used in UK local restaurants. The name of the business signifies that Robots for the usage of restaurants are the main area of operation of the organization (Miao et al. 2022). These robots are not only used in the restaurants for delivering their desired products as well as in preparing the foods in the restaurants as an appreciation of the business can be found. The main outlet of production will be placed at Deansgate of Manchester. The main reason behind selecting the location is that it helped in attracting the local restaurants to purchase the robots from Res-Robo plc. The competitors of the business will be Evotec Group, Wise Robotics, Fanuc Limited, and many others (Ieromonachou et al. 2018). The motive of the business is to produce Robots based on keeping in mind the price factors as well. The minimal price of the products of Res-Robo plc will help in increasing the demand of the business for a stipulated period of time.
A total volume of £12 million is required in Res-Robo plc as it facilitated in starting of the operational activities of the business. The proper classification of the financial planning and development of the initial business idea is required to manage the operational activities of the company (Chai et al. 2021). The company will be able to raise the dividend per share on the equities as soon as they reach its targeted selling activities in the business. However, the plan is to provide the dividend at the rate of 5.57 per share on the total profit of the operational activities of the business. The impact of the seasonal factors will be visualized in the operational activities of the business as well (Xu et al. 2020). It will happen just because as the customers stopped coming to the restaurants, the restaurant owner will not be able to continue their investment in purchasing the robots from the organization. However, the price hike in the spare parts and parts will be considered as one most important factor that will make an impact on the volume of sales of robots in Res-Robo plc.
The pricing strategies will need to be developed in such a manner as it will help in improving the financial activities and operational pattern of the business. The classification of the different managerial activities and developmental policies in the business can help in improving the promotional activities of the business (Yang et al. 2021). The business is going to enter into a competitive market as it seems that competitive pricing strategies will be applicable for Res-Robo plc as it will help in making a huge impact on the financial growth of the business. Mitigation of the final list of prices of the robots with the respect to the prices of the competitors can help in developing the sustainable activities of the business. However, the growth of the business will be observed after the successful completion of two or three successful projects within a stipulated period of time (Taleizadeh et al. 2021). Thereafter, the business will be able to raise the price for the products as it will help in making a reasonable competition to the local market. Without a sustainable name or frame, Res-Robo plc will not be able to increase the prices of its robots as it will create a major problem in reaching sufficient demand in the UK market.
The application of the trend following the exit profit mark-up pattern is going to be applied to the operational activities of Res-Robo plc. The main perspective of using the profit mark-up strategies is that it helped in increasing the sustainable volume of the operational growth in the business (Kweon and Kweon, 2021). The business activities are going to increase the profit pattern of the business as soon as it facilitates more than five successful projects and gets sustainable demand into the market. Effective evaluation of the financial strategies and maintaining reasonable growth in the business activities of Res–Robo plc can help in managing adequate growth into the products. The business policies of the organization should need to be developed to improvise adequate operational policies as well as the marginal growth of the business. The development of the business activities and sustainable growth in the business has helped in maintaining decent growth in the business (Hwang et al. 2020). Adequate mobilization of the financial schemes and concentrating on the sustainable marginal activities can help in improving the sustainable pricing activities in the business. Relevant pricing opportunities and consideration of the growth measures can help in developing the financial activities of Res- Robo plc.
The targeted sales of the Res- Robo plc will be considered as £180000 for the first two years and the value of the total sales will be increased to £250000. The advancement of the technology and the improvement of the techniques will help in improving the total operational activities of the business (Zhang et al. 2021). The cost projection will play an effective role in the breakeven analysis as it will facilitate visualizing the evaluation of the managerial activities of the business. The direct material costs of Res-Robo plc are observed as £55000 and the labour costs of preparing the robots will be £25000. The total volume of the variable costs of the organization will be £80000. The fixed costs of Res-Robo plc will be evaluated as the cost of purchasing the machines and the cost of establishing the product line within the business. The evaluation of the managerial activities and the visualization of the sustainable issues is considered adequate in developing the breakeven analysis of Res-Robo plc (Baek et al. 2019). The potential impact of the fixed costs and the utilization of the managerial techniques such as the fixed costs of Res-Robo plc will be observed as £60000 into the business. The break-even point of Res-Robo plc will be observed as £108000 and the contribution margin of the organization is observed as 56%.
The total fixed costs of the business are assumed to remain constant for the purpose of preparing the breakeven analysis of the business. In the case of preparing the break-even analysis of the Res-Robo plc, the total worth of £60000 was observed as fixed for the breakeven analysis of the organization. However, the other effective assumption is that the several cost elements cannot be enabled to divide into several segments for the break-even analysis (Chuang and Chiu, 2021). The behaviour of the costs is said to be linear in the analysis of the financial activities of the organization. The overall costs of the Res–Robo will be segregated into two different segments such as fixed and variable expenses. The total volume of the selling activities of the organization is directly connected with influencing the overall costs of the business (Jiang et al. 2021). One of the important assumptions observed in the break-even analysis of Res-Robo plc is that the relationship between the cost and revenue will be observed as linear.
The importance of the value supplier will be required to be justified for the operational activities of the business (Liang et al. 2021). The business activities of Res-Robo plc will be dependent on the supplier of the organization as the increase or decrease in the prices of the parts make an impact on the parts of the robots make an impact on the selling price of the robots. In further, the business activities of Res-Robo plc will give importance to the selling agents of the business as they helped in maximizing the sales of Robots through different vendors (Deveaux, 2019). The maximization of the activities and assistance of the financial prospects helped in developing the sustainable activities of the organization.
The financial aspects of the Res- Robo plc will facilitate in evaluating the financial performances of the business into the upcoming ten years (Wang et al. 2021). Consideration of the non-financial aspects of Res- Robo plc visualizes that the pricing strategies of the organization are perfect and the business plan should need to be accepted. The demand for robots will be increased in restaurants as the competitors in the local market will be associated with improving the financial growth of the business. The reason behind making investments within the project is that the rate of return in this project will be sustainable. The project will be able to accumulate sustainable demand from the market as the business plan will expand due to the improvisation and technological perspective used in the business (Zhu and Li, 2020). The abundance of knowledge and the utilization of the necessary resources in the robotics business of Res- Robo plc will help in maximizing the targeted sales within a stipulated period of time.
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