Question

NEW BUSINESS VENTURE ASSIGNMENT #5

Business Model Canvas elements: Revenue Streams, Cost Structure

Answer the following questions and upload the completed form to Canvas.

Your business idea : can choose any business to fill the question or blanks below as being asked.

1. What is the product that you sell?

2. Revenue Streams - Update the “menu”, listing the main product or service you will sell, and the price you will charge (just use 1 product). Estimate number sold per month & year.

Example (edit and change for your business)

Item	Price	Quantity sold per month	Quantity sold per year

3. Cost Structure: What are the costs you will have to run this business?

3A. Variable costs: What do you believe your costs will be (materials + labor + distribution) per unit sold? Fill in this sheet with your own info and calculate total.

Example (edit and change for your business)

Item	Amount per unit
Total variable costs spent per month	$	= cost per unit x quantity sold per month
Total variable costs spent per year		= cost per unit cost x quantity sold per year

3B. Fixed costs: What do you think your fixed monthly costs are going to be? Fixed costs must be paid regardless of number of units sold. (e.g. utilities, rent, employee salaries etc.) Fill in this sheet with your own info and calculate total.

Example (edit and change for your business)

Item	Amount per month	Amount per year
Total fixed costs

3C. One-time costs: What are the one-time costs you need to spend to get this business up and running (equipment, down payment, business cards, website creation, equipment purchase etc.)? These costs only occur once and are not part of the ongoing business costs. Edit and complete this table with your own info.

Example

Item	Amount
Total one-time costs

4. Profit and Loss: What would be your profits or losses for the year?

Fill in this chart with the correct calculated numbers using the information you entered in the charts above.

	Monthly	Yearly
Quantity of units sold			Use your answer from question #2
Price per unit			Use your answer from question #2
Cost per unit			Use your answer from question #3A
Revenue			Revenue = price x quantity of units sold
Variable Costs			Use your answer from question #3A
+ Fixed costs			Use your answer from question #3B
= Total Costs			Variable costs + fixed costs = total costs
= Profit			Profit = Revenue – Total Costs

Answer 1

1) what is the product you will sell ?

i will sell hand bags.

2)revenue stream

item	price	quantity sold per month	quantity sold per year
bag	500	1000 units	12,000 units

3) cost structure :-

3)a) variable cost= ( material +labour + distribution) per unit sold

   material = 50

   labour = 40

   distribution = 40

total variable cost per unit = 50+40+40

130 per unit

total variable cost per month = no of units sold *cost per unit

   1000*130

= 1,30,000

total cost per year = no of units sold per year * cost per unit

= 120000* 130

= 15,60,000

3)b) fixed cost = utilities cost + rent+ employee salary

   utilities cost per month = 10000

rent per month = 50000

employee salary = 10,0000

= 70,000

item	amount per month	amount per year
total fixed cost	70,000	8,40,000 (70,000*12)

3)c) one time cost :- it is paid once in a year like downpayment,equipment etc

total one time cost = 2,40,000 per year

4) calculation of profit or loss

particulars	monthly	yearly
no of units sold	1000	12,000
revenue (no of units sold * price per unit)	5,00,000 (1000*500)	60,00,000 12,000*500
total cost
variable cost	1,30,000	15,60,000
fixed cost	70,000	8,40,000
one time cost	20,000	2,40,000
	2,20,000	26,40,000
profit ( revenue - total cost)	2,80,000	33,60,000