Writing Resources
Overview of Expected Results The results expected for the 2018 calendar year for Sun Worship Leisure Wear include Ø Sales Income 2 242 500 Ø Cost of Goods Sold 1 509 874 Ø Operating Expenses 81 900 Ø Net Income 650 726 Should the expected results be realised Sun Worship Leisure Wear will have achieved a 29 profit margin indicating positive financial efficiency and stability Additionally it is budgeted that Sun Worship Leisure Wear will have having produced 27 470 units sold 27 340 units and at the conclusion of 2018 Sun Worship Leisure Wear will have a cash surplus of 499 252 2 Product Analysis The Bikini line has the most positive contribution margin at 36 11 both the Board Short and Towels lines are also resulting in positive Contribution margins with 19 18 and 12 61 respectively The Bag line however is currently expected to run with a negative contribution margin of 8 1 I recommend investigating if this is product line contributes to sales of other products or if costs can be improved If not it may be prudent to drop the Bag line from production Table 1 Contribution Margin by Product Bikinis Board Shorts Towels Bags Selling Price P U 100 00 75 00 55 00 45 00 Direct Materials 32 25 34 25 31 50 26 50 Direct Labour 28 00 21 00 11 20 16 80 Variable Manufacturing Overheads 3 64 5 36 5 36 5 36 Contribution Margin P U 36 11 19 18 12 61 8 1 3 Cash Position The Monthly Cash Budget has been prepared for the 2018 calendar year The budget reflects an expected cash surplus of 499 252 at the conclusion of December 2018 after satisfying all required payments This cash liquidity is desirable however Sun Worship Leisure Wear should determine a fixed cash balance level any surplus should then be used to pay down the loan which in will reduce the monthly interest payments and assist with reducing fixed costs
