Grade 43/50

Worksheet -2

Other parts -5

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Executive Summary for Budget Model for Currysrus.com

Currysrus.com is an Indian company with headquarters in New Delhi, India. Primarily they are a manufacturing company of a single product, specialty curry source. The specialty curry source is food product of which the company currently has a large market share in India and around the world. As a growth initiative, Currysrus.com is developing a 12-month budget model and employs the expertise of Financial Services Inc, to complete the project.

The model will highlight the progress of a 12-month profit/loss analysis for Currysrus.com. It will also confirm what we know our projection should be at the end of the year. The purpose of the model is for Currysrus.com to perform a decision analysis for future sales.

It is the intention of the Currysrus.com organization to implement the model into their current operational process to improve market share. In order to enhance the decision making, several variations of the analysis are represented to demonstrate the financial impact under the following assumptions:

  • Cost/unit of $11 which will remain fixed for the year.
  • Average monthly sales of 5500 units for five months and increase by 5% each month for the rest of the year.
  • Material cost are $1.00/unit
  • Direct Labor costs are $.50/unit for the first six months and increase by 5% monthly for the rest of the year.
  • Production will be constant @ 6000units/month.
  • Inventory Carrying cost of $4 on ending balancing monthly.

The structure of the analysis shows the profit & loss schedules and includes monthly revenues and expenses and a breakdown of major sources of net profit. Revenues will be generated based on the number of units of specialty source at the base price giving. Expenses are cost of sales, salaries, and all other tax adjustments.

This budget model will be presented to the CEO of Currysrus.com, Mr. Kumar who supports the monthly analysis. The analysis reflects Currysrus.com is currently operating in profitability. This is supported by monthly units produced less the overhead costs of production. Sales revenues are estimated to be about USD 800,000 for 2012 and increase depending on market outlook.

An assumption provided by Mr. Kumar is to determine the outcome of profit and loss when base price of $11 increases by 10% and production reduced by the same margin. Although, the analysis finds that profit will be down, however, due to market demand, Currysrus.com still remains profitable and solvent.

It is the opinion of Financial Services Inc, that these results fairly represent the estimated costs and benefits resulting from the budget model based on the data provided by Currysrus.com. Based on these results, we recommend that Currysrus.com proceed with the goal & initiative for future periods.

Need to analyze why profit falls below 25000 and units below 500

Grade=-2

Part 4 missing grade =-3

Worksheet -2