Old Town White Coffee

Topics: Loan, Debt, Profit Pages: 2 (490 words) Published: April 13, 2013
a) Budget
How is income generated?
What are the major expenses?
A) The income of our company will be generated through the sales of our product. First of all, the creation of our product includes its manufacturing, capital, transportation and tax expense. Our product requires 7 components of plastic materials including chemical contents. The operation of machines will also be another factor for the increased cost of production which will prompt higher wages that should be paid to human labour force who take the main role of controlling most of the processes that occur in the formation of our product. Nevertheless, transportation which helps to deliver the product to his recipient (distributor) will also contribute to more expense if an agreement with the transportation company can be established. Furthermore, the storage space for all products of production should be large enough before their shipment to the port to ensure the right estimated amount of products can be sent per trip. After that, there is tax to be deducted from the revenue and the product would probably cost $210 overall. Hence, we can sell the product for $250 each and make a profit of $40. Our product is polyethylene which can be made into various products such as insulators, construction material, sport mats, automotive cushioning, foam tape, packaging and etc. We sell it to our partners in India so that the distributor will receive the product from us and from then on, they distribute it to their local market which will increase the chances of profitability. Our major expenses will mainly be the cost of obtaining the right materials that are to be a part of the composition of which our product is to be made of, the salaries to be paid to workers operating the machines under hard conditions such as high heat and unpleasant odours and the transportation as well as the packaging of the material when its required to be sent off to the Indian port  Vishakhapatnam (not exactly but...
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