Question

You are starting a new business of Shoes to be sold through internet and specialized stores You can produce 3 per day. You'll work 18 days a month You have a potential customer- which will buy a minimum quantity of 60, they have promised sales of 300 per year, they pay at 60 days You expect to sell 20 per month by internet as of March You need 0.5 square meters of leather & 0.5 kgs of rubber Your rubber supplier sells a minimum of 200 kgs, they only sell at 30 days payment term Your leather supplier sells a minimum of 200 square meters, they only sell at 30 days payment term Ornaments are bough in packages of 50 per package (you use one set per shoe)- you need to pay cash rubber price is 2 per kgs leather price is of 7 per meter Ornamets in general are 5 per shoe Rental cost of the place where you are producing them is 3500/ month (shared space) You are also asked for a 1 months deposit Cost of employee - 400/month (4hrs/ day) Investment of equipment is of 900 Other expected costs - 300/month Jacket sales price is of 45/ unit through the store and 55 directly through internet Web-page 60/ month Jan Feb Mar A Mayun u Aug Sep NovDec Jul Oct Units Sales through store Sales through internet Sales through store Sales through internet 0 0 Days of production Productiorn Needs of fabric Cost of fabric Cost of ornaments 0 Cash Flow Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Initial Balance Sales- internet Sales store Cash Available Equipment Rental Web page Salary Others Payment of materials fabric ornaments Total expenses Cash flow Balance

Answer 1

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Units: Sales through stores	54	54	34	34	34	34	34	22	0	0	0	0
Units : Sales through internet	0	0	20	20	20	20	20	20	20	20	20	20
€ : sale through stores	2430	2430	1530	1530	1530	1530	1530	900	0	0	0	0
Sales through internet	0	0	1100	1100	1100	1100	1100	1100	1100	1100	1100	1100
Days of production	18	18	18	18	18	18	18	18	7	7	7	7
Production	54	54	54	54	54	54	54	54	20	20	20	20
Need of Fabric	27	27	27	27	27	27	27	27	10	10	10	10
Cost of fabric	189	189	189	189	189	189	189	189	70	70	70	70
Cost of ornament	270	270	270	270	270	270	270	270	100	100	100	100

Notes:

(1) it is assumed

• that maximum sale by internet is 20 shoes
• Nomore than 300 shoe can be sold by store
• Minimum requirements of 60 shoes by store is yearly and not monthly
• Production can be done for fraction of hours so we took 6.67 hrs as 7 hours
• Total production capacity is for 3 units* 18 days a month =54 units and for year 54*12 = 648 units

Cash flow

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Intial balance	0	(8930)	(13703)	(14946)	(16189)	(18332)	(20475)	(22618)	(24761)	(26904)	(29264)	(32614)
Sales : internet	0	0	1100	1100	1100	1100	1100	1100	1100	1100	1100	1100
Stores	0	0	2430	2430	1530	1530	1530	1530	1530	990	0	0
Cash available	0	(8930)	(10173)	(11416)	(13559)	(15702)	(17845)	(19988)	(22131)	(24814)	(28164)	(31514)
Equipment	900	0	0	0	0	0	0	0	0	0	0	0
Rental	7000	3500	3500	3500	3500	3500	3500	3500	3500	3500	3500	3500
Web page	60	60	60	60	60	60	60	60	60	60	60	60
Salary	400	400	400	400	400	400	400	400	400	400	400	400
Others	300	300	300	300	300	300	300	300	300	300	300	300
Payment for material	0	54	54	54	54	54	54	54	54	20	20	20
Fabric	0	189	189	189	189	189	189	189	189	70	70	70
Ornament	270	270	270	270	270	270	270	270	270	100	100	100
Total expense	8930	4773	4773	4773	4773	4773	4773	4773	4773	4450	4450	4450
Cash flow balance	(8930)	(13703)	(14946)	(16189)	(18332)	(20475)	(22618)	(24761)	(26904)	(29264)	(32614)	(35964)

Notes

(1) It is assumed that

• No intial balance and negative cash balance is allowed as no further information about fund is given
• Salea through stores takes 60 days as credit so januJan month's sale will be collected in March as 54 units* 45 =1100
• It is stated that internet sale is received in that moment only
• Deposit for rent is assumed to be paid along with rent of January month
• Equipment is purchased in janJanu
• Salary is to be paid in full irrespective of number of hours worked
• All payments for fabric and material are made after 30days that is januJan month's payment is done in fabruary
• Ornament is purchased on cash basis

(2) Any alternative answer with different assumption is equally correct.