prepare a three-year business plan for Space & Light Studios. The plan should be based on...

prepare a three-year business plan for Space & Light Studios. The plan should be based on sustainable growth opportunities amid the market situation and the competition.

Utilize the techniques of cost-volume-profit analysis with the concept of variable and fixed costs, and include budgeted income statement for each of the three-year period. Space&Lights studio case

Expert Solution

Income Statement Showing Three Year Business Plan of Space & Light Studio Based on Cost -Volume -Profit Analysis
					Figures in $
Particular	Unit Cost	1^st Year	Unit Cost	2^nd Year	Unit Cost	3^rd Year
Units		1000 Units		1200 Units		1440 Units
Sales With 20 % Growth (a)	500	500000	500	600000	500	720000

Variable Cost :
1) Direct Material ( Price Rises @ 5% )	100	100000	105	126000	110.25	158760
2) Direct Labour (Rate @ 1.5 hr per Unit @50 per Hr)	75	75000	75	90000	75	108000
3) Variable Manufacturing Cost ( 3 Parts for each Unit Required with cost per Part $7.5) and Price Rises by $ 0.5 cents every coming year	22.5	22500	24	28800	25.5	36720
Price ( 1st yr =$7.5 / 2nd yr = $8/ 3rd =$8.5 perunit)

Total Variable Overhead (b)	197.5	197500	204	244800	210.75	303480

Contribution Margin (c=a-b)	302.5	302500	296	355200	289.25	416520

Fixed Cost ( $ 150000 for period) (d)		150000		150000		150000

Profit (c-d)	152.50	152500	171.00	205200	185.08	266520
Net Profit Ratio		30.50%		34.20%		37.02%

ekkarill92 answered 1 year ago

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