Sales: Andrew and Pete estimate that in May (their first month’s trading), they will sell 150 Seabins in total, growing approximately at a rate of 12% per month until the end of the first financial year in December. So for June (168 Seabins), July (188 Seabins), August (210 Seabins), September (235 Seabins), October (263 Seabins), November (294 Seabins) until December (329 Seabins). The product is not affected by seasonal variations in demand.
3. The direct raw materials required to produce each Seabin will cost £825. As a new business, they cannot assume suppliers will offer any credit, so to be prudent they are planning on the basis that their invoices will all have to be paid at the time of purchase. They plans to keep (in stock) at all times, sufficient inventory of raw materials to cover the following month’s trading (so for example, raw materials for May will have to be procured and paid for in April, etc). As they plan to make-to-order and to manufacture on a just-in-time basis, it is not necessary to plan for any inventory of either finished products or work-in-progress.
4. Staff costs are forecast to be:-
The partners will be producing the SeaBins from a workshop at the back of a showroom. They will recruit their surfing friends as staff on the following basis:
Workshop: 5 full time people paid at £15 per hour, each working a 50-hour week
Showroom: 2 full time people paid at £11 per hour, each working a 50-hour week.
Staff wages will be paid at the end of each week