Posted: February 27th, 2023

Homework

Homework

Module 6 – Application & Analysis Assignment

Assume you are starting a small retail business. A retail business is one where you purchase the product
(rather than making the product yourself) and resale it. Think about products that you can purchase in
bulk (e.g., from Costco, Sam’s, etc.) and repackage them into smaller quantities to offer for sale at a
local fair, a sporting event, or a similar venue.

Now, think about what information you need to create a budget for a three-month period. Investigate
the price and quantity you can purchase this product at a retail warehouse. Choose a selling price for
the repackaged product. Make reasonable assumptions about how many of the repackaged products
you can sell each month and your related expenses.

Respond to the following five (5) questions based on your investigation and decisions above as well as
your knowledge from this module’s material.

1. Describe your product. What is the cost of this product? What size (quantity) will you
purchase? What size (quantity) will be your repackaged product? At what price will you sell
your repackaged product? Make projections of your sales in units for each of the next 3
months.

2. Estimate how many hours you will spend in each of the next 3 months doing the purchasing and
repackaging. Select a reasonable wage rate for yourself.

3. What other expenses are you likely to have related to the repackaging of your product (e.g.,
bags, containers, etc.)? Make projections of your costs for each of the next 3 months.

4. What other expenses are you likely to have related to the selling of your product (e.g., booth
rental, the vendor license, etc.)? Estimate how many hours you will spend selling the products
and use the wage rate you decided above. Make projections of your costs for each of the next g
3 months.

5. Prepare a budgeted income statement for a 3-month period (i.e., one quarter). Exhibit 9-12 in
the textbook is an example of a budgeted income statement. However, your budgeted income
statement should have 4 columns with amounts – one for each month and a total for the
quarter.

a. Sales revenue should be based on 1. above
b. Costs of goods sold should be based on 1., 2., and 3. above
c. Operating expenses should be based on 4. above