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Managing Financial Resources LEEDS BUSINESS SCHOOL

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 Managing Financial Resources
Managing Financial Resources

2

MODULE TITLE:                  Managing Financial Resources

TITLE

LEVEL:                                  H7

MSCMN, MSMAM, MSMAF, MSMIB, MSMHR,

LOCATION:        MyBeckett MFR module page

ASSESSOR(S):                      Clare Guthrie

—————————————————————————————————————-

is an INDIVIDUAL assignment.

You are expected to work individually. You must not work with any other student. Any evidence of collusion will be dealt with as, at least, a Category 2 academic integrity offence. You have been warned!

You are required to develop a business proposal in relation to starting up a business selling take-away pizzas.

This is broken down into a number of specific tasks which you will need to complete, as set out below.

Each student will be allocated a unique location in the UK by the module leader. The location data will be provided from the Geographist website.. The link is provided below:

As you work on your proposal, you will need to reflect the specific circumstances of your allocated town or city.

You have become aware of an opportunity to open a take-away pizza shop in your allocated UK town or city. Your initial analysis of the market has given you confidence that there is demand from the town’s residents and you are keen to start the business as soon as possible.

You will locate a suitable building to rent for your business in the town or city but do not have the finance immediately available to cover the set-up costs. These costs need to be considered as part of the fixed costs in task 1bi and you MUST show how you have arrived at this cost. Assume these will be paid in full in the first month of trading for the cash budget purposes in task 3. You are to assume you will begin trading on 1st September 2022.

You will need a business plan (Part A – excel file – tasks 1 to 3) to support an application for finance to set up and begin trading. The presentation for your application for finance will be presented in the form of a power point file (Part B – tasks 4a to c). You are going to specialise in pizza sales as you have identified a gap in the market for these.

  • This assessment is worth 40% of the marks for the module
  • Part A (excel file) and Part B (PowerPoint file with audio) must be submitted electronically via MyBeckett. Full instructions will be provided on the module page relating to submission requirements.
  • You should only use Harvard referencing and any websites referred to must be properly referenced.
Date generic feedback will be available:Within four weeks of the assessment period, subject to the date set for the release of results
How generic feedback will be returned to you:Posted on the module on MyBeckett.
Date provisional marks will be available:Within four weeks of the assessment period, subject to the date set for the release of results
How provisional marks will be returned to you:Posted on the module on MyBeckett.
Date individual feedback will availableFollowing the Module Board and the return of all scripts from the External Examiner
How individual feedback will be returned to you:Feedback arrangements will be determined by the Module Leader.

You must attempt all tasks 1 to 3 inclusive.

Part A

1 3

File)

There are 4 parts to this task. You need to show each part on a separate page of

N.B. You will lose marks if all four elements are on one page.

Part 1 –

Findings from your initial market research are positive and you have come up with a Sales Factor of 25%, this assumes that you can make sales to 25% of the town’s population each month.

below:

You may also wish to undertake research about the characteristics of your allocated town to understand the likely market for your products.

Required:

  • Using the information above, work out the monthly number of pizza sales you are planning to achieve. Show each month’s sales clearly in your spreadsheet.
  • Calculate the annual number of pizza sales.
  • Consider whether seasonality is likely to be a factor influencing your monthly sales numbers and make any necessary adjustments.
  • Present the details clearly about why you have or have not considered seasonality for each months sales.

Part        Fixed Costs and Fixed Costs per pizza

  • Rent of premises – you need to research the cost of renting suitable premises in your allocated town. You can use property search websites such as Rightmove. You MUST show clearly where you have found this cost with a link to the website. If you do not you will lose marks.
  • Staffing costs. These include manager salaries; hourly paid staff (must be paid at least at the current minimum wage per hour). You should also indicate your opening hours each day for the full week and calculate the hours you need to staff the opening of your shop. Make it clear how many sales staff you will employ. In the calculation of staff wages, you should clearly state your assumptions and use formulae to calculate the total wages cost. Employers’ oncosts can be ignored for the purpose of this exercise. However,
  • Other Fixed Costs – You need to research other fixed costs that the business may incur and include these as part of your fixed costs. Please note that as this is a take-away business you do not require the necessary equipment for customers to eat on the premises. However, there are additional fixed costs (overheads) you need to factor in for running the business. Links to websites you find these costs MUST be provided. If these are not provided you will lose marks.

Part 3

  • Variable costs – you need to make assumptions for the cost of your pizza. For ingredient costs, you can use those charged by competitors and you can be as creative as you wish as to the type of pizza you decide to sell. Also, include the cost per box for packaging purposes. Links to websites you find these costs MUST

Part 4 – Total Cost per Pizza and Selling Price

  • Total Cost per pizza – you need to show clearly the total fixed plus variable costs per pizza. These should clearly link to data provided in Task 1 Parts 2 and 3.
  • Calculate two selling prices for your pizza using:
  • Full cost-plus profit margin – you can choose the percentage mark-up on cost you are using. This must be clearly shown.
  • A market price (this is based on competitors selling prices). You need to show clearly, where you got these prices. This entails research. You MUST provide links to competitors websites for each of these. You need a minimum of 3 competitors’ prices. These should be local competitors to your pizza business located in your given town or city.
  • Show clearly what selling price you are going to use.

Using your answer to Task 1 (fixed costs, variable costs and your recommended selling price for a pizza), you are required to:

  1. Calculate the break-even point for number of pizzas to be sold. Construct a table which clearly shows the costs, revenues and profit/loss at various levels of sales You need to show clearly that the numbers link directly to all previous tasks.
  • Calculate the margin of safety.

C) Produce a breakeven chart. This need to be labelled clearly for full marks and include axis data from your table in Task 1 Part a.

  1. Prepare a cash budget for the first year of trading showing receipts and payments month by month for the pizza shop. This should incorporate the sales and cost data from the previous tasks (using formulae to link to the appropriate cells). You are required to display an overall cash position.
  • You are in negotiations with a number of established local food retailers to supply pizzas to sell to their customers. This is an exciting opportunity to change the focus of the business. Should you win the contract to supply pizzas, you would stop selling them in your shop and sell only directly to these retailers, this would increase the number of pizzas sold (calculated in task 1) by a further 30% in each month. As part of the deal, you have offered the local organizations a 30- day credit period for all sales. If you are to go ahead with this, you can revisit all of your assumptions about the costs associated with the business. If you do revise costs and/or selling prices make it clear why you have done so. This is a different business model and your costs should be updated to reflect that.

Prepare a revised cash budget for the first year of trading showing receipts and payments month by month for the revised business model.

Part B

  1. An introduction which provides:
    1. Location of your premises including a clear rationale for this location
    1. Local competitors
    1. Relevant demographic data
    1. Seasonality factors for your sales – whether you have adjusted for them or not and why.
    1. Any additional information you feel is relevant for your business
  • You are also required to provide a clear rationale for the selling price you have chosen taking into account the consideration of different pricing strategies including the profit mark-up you have considered. This should be clearly linked to your excel file. You MUST show evidence of research relating to pricing strategies, to show you knowledge and understanding of these. You then need to provide a critical analysis of each of these to support the pricing strategy you have decided to adopt for your business.
  • There are 2 parts to this section, both of which need to be addressed:
  • Critically analyse the use of break-even analysis to evaluate impact of each potential change to fixed costs, variable costs and selling price. You need to critically evaluate the assumptions inherent within the break-even model you have used.
  • Critically analyse the value of the supplier contract to your business. Clearly state whether you are planning to accept the contract or not. You MUST consider the non-financial aspects.

Each part a and b inclusive should be 2 slides maximum. For part c you can use up

list

Marking Criteria The attached marking rubric is how your grades will be determined against the marking criteria. Feedback will be presented in this format via MyBeckett.
 Task 10612182430 
 – Sales, Variable Costs, Fixed Costs andNo salesSales figuresMonthly salesGood layoutVery goodExcellent 
Selling Pricefiguresprovided, butfigures containof salespresentationpresentation,
 provided. Nono indicationerrors in thefigures.of salesaccurate
 determinationof how theseformulae orSomefigures andformulae
 of fixedwere derived.lack offormulaeuse ofand with
 costs. NoFixed costsformulae.present. Noformulae.excellent use
 determinationshown, but noFixed CostrelevantVery goodof graphics
 of variableformulae orpresentationgraphics.layout.and
 costs. Noindication ofunclear.Good layout.All possibleformatting.
 determinationhow they areLayoutAll possiblefixed costsExcellent
 of total costscalculated.demonstratesfixed costsidentified.layout. All
 and sellingUnclear to seesomeincluded.Clear to seepossible
 prices.how the staffcompetency.Some costshow thefixed costs
  costs areIndication ofunclear howlabour / staffidentified.
  calculated. Nohow somethey arecosts areClear to see
  clear link forcosts arederived.calculated.how the
  calculation ofderived butClear links toTotal fixedlabour / staff
  fixed costslacking sometask 1. Goodcostscosts are
  per pizza todetail. Layoutlayout. Allcorrectedcalculated.
  units in taskdemonstratespossibletotalled.Total fixed
  1. VariablesomevariableFixed costcosts
  costs, but nocompetency.costsper pizzacorrected
  formulae orIndication ofincluded.links directlytotalled.
  indication ofhow someSome coststo salesFixed cost
  how they arecosts areunclear howunits in taskper pizza
  calculated.derived butthey are1.links directly
  Attempt atlacking somederived.Very goodto sales
  variable costsdetail. LayoutGood layout.layout. Allunits in task
  or sellingdemonstratesAll possiblepossible1. Inclusion
  prices, but nosomecostsvariableof
  formulae orcompetency.included.costsappropriate
  indication ofIndication ofSome costsidentified.graphics.
  how they arehow someand orTotalExcellent
  calculated. Nocosts andselling pricevariablelayout. All
  clear link toselling pricesunclear howcostspossible
  data fromare derived butthey arecorrectedvariable
  previouslacking somederived.totalled. Verycosts
  tasks. Poordetail.Clear links togood layout.identified.
  formatting ofFormatting ofpreviousAll possibleTotal
  the data.the data cantasks. Goodcostsvariable
   be improved.formattingidentified.costs
    of the data.Total costscorrected
     correctedtotalled.
     totalled.Inclusion of
     Total costappropriate
     per pizzagraphics.
     links directlyExcellent
     to previouslayout. All
     tasks.possible
     Very goodcosts
     formattingidentified.
     of numbers.Total costs
      corrected
      totalled.
      Total cost
      per pizza
      links directly
      to previous
      costs. Clear
      indication of
      chosen
      selling price.
      Relevant
      selection of
      competitors.
      Excellent
      presentation
      in terms of
       formatting the data. 
 Task 20246810 
 Break-even AnalysisBreak-evenPoor break-Good break-Very goodVery goodExcellent 
 chart non-even chart,even thatbreak-evenbreak-evenbreak-even
 existent. Nowhich doesdemonstrateschart. Fullychart. Fullychart. Fully
 calculation ofnotunderstanding.labelled.labelled. Axislabelled.
 margin ofdemonstrateIt does notData doesdata relatesAxis data
 safety and noanfully relate tonot fully linkto previousrelates to
 attempt atunderstandingprevious data.to previoustask data.previous
 the scenarioof theAttempt at thetask data.Very goodtask data.
 analysis.concept. Nomargin ofVery goodformatting.Excellent
  or poorsafety andformatting.Very goodformatting.
  knowledge ofattempt at oneGoodmargin ofAll numbers
  margin ofof moreattempt atsafety andlinked to
  safety. No orscenarios.margin ofattempt at 3previous
  poor attemptFormatting ofsafety and 2scenarios.tasks.
  at scenarios.the data canor moreVery goodExcellent
  Poorbe improved.scenarios.formattingcalculation
  formatting of Goodof numbers.of margin of
  the data. formatting of safety and
    the data. all 3
      scenarios.
      Fully cell
      referenced.
      Margin of
      safety
      shown on
      break-even
      chart.
      Excellent
      presentation
      in terms of
      formatting
      the data.
 Task 30246810 
 Cash BudgetsNo cash budget producedBasic cash budget for cash sales and no formulae linking to previous tasks. Poor formatting of the data.Cash budget for cash sales and/or credit sales with limited formulae. Formatting of the data can be improved.Good cash budget for cash sales and credit sales with links to previous tasks in part. Good formatting of the data.Very good cash budget for cash and credit sales with full linkages to previous tasks. Very good formatting of the data.Excellent cash budgets for both cash and credit sales and full use of formulae and excellent presentation. Excellent formatting of the data. 
 Task 4 a0246810 
 IntroductionNo clear introduction.A brief introduction but does not include: location details; local competitors; relevant demographic data;An attempt at an introduction but only focuses briefly on some aspects of: location details; local competitors; relevant demographic data;A good introduction which covers two or more aspects of: location details; local competitors; relevant demographic data;A very good introduction which covers most aspects of: location details; local competitors; relevant demographic data.An excellent introduction which covers all aspects of: location details; local competitors; relevant demographic data; any relevant additional information 
 Task 4 b0246810 
 Rationale of selling price and a critical analysis of the pricing strategies.No rationale for the final choice of the selling price provided. No discussion of the pricing strategies to support that. No discussion of the profit margin.A brief attempt at the rationale for the choice of selling price. No or little reference to pricing strategies. No discussion of the profit margin used.An attempt at the rationale for the choice of selling price in relation to one or more pricing strategies. Brief discussion of the profit margin.A good rationale for the choice of selling price with good reference to the relevant pricing strategies. Good explanation of the profit margin.A very good rationale for the choice of selling price and very strong critical analysis of the potential pricing strategies. Very good explanation of the profit margin.An excellent rationale for the choice of selling price and excellent critical analysis of the potential pricing strategies. Excellent explanation of the profit margin 
 Task 4 c0612182430 
 Critical analysis of Break-even as a tool for evaluation of the business.Critical analysis of the supplier contract and non-financial factors. No answer attempted.A brief coverage of some of the limitations but not linked to the business. Brief coverage of some of the limitations of accepting the supplier contract.An attempt to critically discuss the limitations of break-even analysis in relation to the business. Some discussion of the issues faced by accepting the supplier contract.A good attempt to critically analyse the usefulness of break- even and explain how this relates to the business. Good critical analysis of the non- financial factors relating to the supplier contract.A very good attempt to critically analyse the usefulness of break- even and explain how this relates to the business. A very good critical discussion of the supplier contract.An excellent attempt to critically analyse the usefulness of break- even and explain how this relates to the business. An excellent critical discussion of the supplier contract.