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Managing Financial Resources

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2021/22 SEMESTER 2

MODULE TITLE:                      Managing Financial Resources

TITLE OF ASSESSMENT:         Resit Coursework: Development of financial information to support a catering business start-up.  

LEVEL:                                     H7                               

COURSE(S):                             MSCMN, MSMAM, MSMAF, MSMIB, MSMHR, MSMAL                            

DEADLINE DATE FOR

SUBMISSION BY STUDENTS:  29th July 2022 at midday (UK time)

SUBMISSION LOCATION:       Via MyBeckett MFR module page

ASSESSOR(S):                         Clare Guthrie

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Managing Financial Resources
Managing Financial Resources

Resit Coursework Brief:

This 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!

Assessment task:

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.

Notes for Students:

Instructions for completion and submission of written assignment

  • 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.

Feedback:

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.

Coursework Tasks:

You must attempt all tasks 1 to 3 inclusive.

Part A – Tasks 1 – 3 inclusive (Excel File)

Task 1 – Sales, Cost and Selling Price calculations                                 (30 marks)                                             

There are 4 parts to this task. You need to show each part on a separate page of your spreadsheet. N.B. You will lose marks if all four elements are on one page.                                                                                                                   

Part 1 – Sales

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.  

You can find the population for your allocated town in the link 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 2 – 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, for the hourly rate of pay you MUST make sure it complies with the UK Government’s policy for National Minimum Wage rates.
  • 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 and Variable Cost per pizza                   

  • 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 be provided.

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:

o   Full cost-plus profit margin – you can choose the percentage mark-up on cost you are using. This must be clearly shown.

o   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.

Task 2 – Break-even point and scenario analysis                                                               (10 marks)

 

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

 

a)     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.
  • 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.

Task 3 – Cash Budget                                                                                                            (10 marks)

N.B. For both parts a and b, assume you are renting the premises.

  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 – Task 4 PowerPoint element

Task 4 – Presentation (50 marks)

You have identified a potential investor. You excel spreadsheets have been provided to them and they have asked for a meeting to further explore this investment opportunity. You need to prepare a presentation for this meeting. The purpose of this is to support your business plan to secure the required finance to start your business. You need to convince the investor that you have a viable business idea.

  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                                                                                                                (10 marks)
  • 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.                                (10 marks)
  • 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.                                                       (30 marks)

You can add notes to each slide, but there is no requirement to add audio to your presentation.

Each part a and b inclusive should be 2 slides maximum. For part c you can use up to 4 slides maximum. No marks will be awarded for copying and pasting elements of the excel file into a slide. You can have an additional 2 slides at the end to list references. MAXIMUM of 10 slides.

This needs to add value and persuade an investor to part with their money and invest in your take-away pizza business rather than an alternative investment.

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 1 0 6 12 18 24 30 – Sales, Variable Costs, Fixed Costs and Selling Price No sales figures provided.  No determination of fixed costs. No determination of variable costs. No determination of total costs and selling prices. Sales figures provided, but no indication of how these were derived.  Fixed costs shown, but no formulae or indication of how they are calculated. Unclear to see how the staff costs are calculated. No clear link for calculation of fixed costs per pizza to units in task 1. Variable costs, but no formulae or indication of how they are calculated. Attempt at variable costs or selling prices, but no formulae or indication of how they are calculated. No clear link to data from previous tasks. Poor formatting of the data. Monthly sales figures contain errors in the formulae or lack of formulae. Fixed Cost presentation unclear. Layout demonstrates some competency. Indication of how some costs are derived but lacking some detail. Layout demonstrates some competency. Indication of how some costs are derived but lacking some detail. Layout demonstrates some competency. Indication of how some costs and selling prices are derived but lacking some detail. Formatting of the data can be improved. Good layout of sales figures. Some formulae present. No relevant graphics.  Good layout. All possible fixed costs included. Some costs unclear how they are derived. Clear links to task 1. Good layout. All possible variable costs included. Some costs unclear how they are derived. Good layout. All possible costs included. Some costs and or selling price unclear how they are derived. Clear links to previous tasks. Good formatting of the data. Very good presentation of sales figures and use of formulae.  Very good layout. All possible fixed costs identified. Clear to see how the labour / staff costs are calculated. Total fixed costs corrected totalled. Fixed cost per pizza links directly to sales units in task 1. Very good layout. All possible variable costs identified. Total variable costs corrected totalled. Very good layout. All possible costs identified. Total costs corrected totalled. Total cost per pizza links directly to previous tasks. Very good formatting of numbers. Excellent presentation, accurate formulae and with excellent use of graphics and formatting. Excellent layout. All possible fixed costs identified. Clear to see how the labour / staff costs are calculated. Total fixed costs corrected totalled. Fixed cost per pizza links directly to sales units in task 1. Inclusion of appropriate graphics. Excellent layout. All possible variable costs identified. Total variable costs corrected totalled. Inclusion of appropriate graphics. Excellent layout. All possible costs identified. 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 2 0 2 4 6 8 10 Break-even Analysis   Break-even chart non-existent. No calculation of margin of safety and no attempt at the scenario analysis. Poor break-even chart, which does not demonstrate an understanding of the concept. No or poor knowledge of margin of safety. No or poor attempt at scenarios.  Poor formatting of the data. Good break-even that demonstrates understanding. It does not fully relate to previous data. Attempt at the margin of safety and attempt at one of more scenarios.  Formatting of the data can be improved. Very good break-even chart. Fully labelled. Data does not fully link to previous task data. Very good formatting. Good attempt at margin of safety and 2 or more scenarios.  Good formatting of the data. Very good break-even chart. Fully labelled. Axis data relates to previous task data. Very good formatting. Very good margin of safety and attempt at 3 scenarios.  Very good formatting of numbers. Excellent break-even chart. Fully labelled. Axis data relates to previous task data. Excellent formatting. All numbers linked to previous tasks. Excellent calculation of margin of safety and all 3 scenarios. Fully cell referenced. Margin of safety shown on break-even chart.  Excellent presentation in terms of formatting the data. Task 3 0 2 4 6 8 10 Cash Budgets No cash budget produced Basic 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 a 0 2 4 6 8 10 Introduction     No 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 b   0 2 4 6 8 10 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 c 0 6 12 18 24 30 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.