Mirage Electronics Pty Ltd estimates in the first year, the company would have a sale of $694,925 and a net profit of $8,115. As the business is newly established with no reputation in the market, not every clothing chain will be willing to spend a large amount of money on Reflections. Therefore, in the worst-case scenario, the business projected that only 5 clothing chains will purchase our product as a trial in Queensland stores. The price set previously in the marketing plan (3.2.3) states that $385 will be a reasonable price. However, when wholesaling to companies, the price should be deducted to attract more buyers while also on the other hand provide an adequate profit for the company. The business will be giving out a 5% discount when wholesaling and the new unit price will be $365.75. As shown in the table, the company is anticipated to sell 1900 Reflections, which provided $694,925 of sales.
The business is projected to have a low profit of $8115 due to the significant expense involved in operation as shown in the income statement. In particular, it is noted that wages, superannuation are costing the most for the business. To reduce the cost of wages and superannuation, the company has already made an effort in hiring a minimum amount of staff. Also, the factory workers of the company are only working 4 days a week, which lessen the salary payable to them by $25,210 each year. Furthermore, the company has also tried to reduce other expenses. Compare to the annual rental payment of $35,000 - $100,000 of some properties, the rent of the factory chosen by the company is at low rate costing $17,784 per year. The advertising cost is also lessened as big campaign of promotion will not be needed if the company is only selling the product to shops in the first year.
The inventory turnover rate of the company is 2.7 times in the first year. Comparing to the industry average of 6.8 times, this might indicate that the company has a low level of sales by only...
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