Business Simulation - Assignment 1
F I N A N C I A L M A N A G E M E N T
Business simulation "Does it pay"?
assignment 1
1. Nature of my Business ………...………… ……… …….................................
2. What measure unit is appropriate: (eg m, m2, m3...) ……………........
3. Name some 5 relevant business running cost titles to FIXED or VARIABLE
in following table (some 5 crucial titles is enough)
4. Mark with letter Y cost title you can controll as a manager
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variablE |
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Notes:
1. ! Don't mistake INITIAL cost against CURRENT (running, operating, manufacturing within a year) cost in use. Initial Total Project/Development Cost see the separate text and the form "Project/Development Budget". This initial purchase cost of fixed assets is transformed into current cost step by step by depreciation or amortization!
2. To facilitate the training, chose only business output with physical measure units (m3, m2, pieces, kg, etc) – never business like "supermarket", "design, architect. or consult. office alike).
3. Your business simulation MUST utilize your own (= no rental, leasing etc) fixed assets – some construction works and at least a car).
The principleS of this business simulation
Abbreviations and symbols:
BEP……break-event point (TC = S), therefore profit = loss = 0
UP..........unit price (P1 = unit price without any tax)
TC… ....total costs (eg TPC = total initial project cost)
F…….... fixed cost (inputs constant to Q), F = constant
V…… .....variable cost (inputs proporcionaly related to Q), V = Q*sun
S…….....sales (output), S = Q * P1
Q……....quantity (units)
Qcrit...... critical quantity for BEP (profit = loss = 0)
Qopt......optimal volume of output – here is Qopt >> Qcrit (cca +30%),
so that the business generates profit
sun …....standard input needs (consumption per unit)