Identify three products or
services of your firm
When looking at my company’s
financial statements from 2011 to 2014 there was only two forms for income they
received. These two forms are: Debts forgiven and Interest Income. The debts
forgiven I would not class as a product or service that Oz Brewing Limited has
because it is the money Oz Brewing cannot pay from its Mad Monk venture. The only
service in the financial statements for Oz Brewing Limited would be the interest
income from the money they had invested. Future products once Oz Brewing
Limited has acquired 333D Group Proprietary Limited would be the following service
and product which is: creating specific products for customers and product designs
for customers. The three products or services Oz Brewing Limited will have now
or in the future are the following:
- - Interest Income from Term Deposits (Service)
- - Creating Specific Products for Customers (Product)
- - Product Designs for Customers (Service).
Interest Income from Term Deposits
Selling Price – 5.5% per annum
Variable Cost – - When the interest rate
comes due the interest rate changes depending on the country’s economic.
-
Bank Fees and Charges
Contribution Margins - = Sales – Variable Costs
2012 = 39086
– 30
=
$39 056
2013 = 19807
– 30
=
$19 777
2014 = 3192 –
30
=
$3 162
Creating
Specific Products for Customers – Future Sales
For this
product there is no previous annual report so I have to make calculated prices
for these products.
Selling Price – $1 300 per design
Variable Cost – Wages - $500 per design
Transportation
- $200 per design
Fixed Cost – Electricity - $300 per design
Materials
- $50 per design
Contribution Margins - = Sales – Variable Cost – Fixed Cost
=
1 300 – 500 - 200 – 300 – 50
=
$250 per design
Product
Designs for Customers – Future Sales
For this
product there is no previous annual report so I have to make calculated prices
for these services.
Selling Price – $1 500 per design
Variable Cost – Wages - $700 per
design
Fixed Cost – Electricity - $100 per design
ICT
Licensing Equipment - $120 per design
Materials
- $80 per
design
Contribution Margins - = Sales – Variable Cost – Fixed Costs
=
1 500 – 700 – 100 – 120 -80
=
$500 per design
Discussion on the contribution margins
Calculating the contribution
margins was easy once you had the formula. The part that I had trouble with was
the products and services. The reason my company has been into liquidation so
many times are because for the last four years they have had no revenue coming
in from products or services. Two products that I did the selling price, variable
cost and contribution margin is future products or services that they could choose
to sell to their clients. Martin had stated in the Assessment 2 information
sheet that “if you have trouble easily identifying three specific products or
services of your firm, then quickly make some assumptions about what specific
products/services your firm might have’. So I made assumptions on the company
they are looking at taking over which is 333D Group Proprietary Limited. When
calculating the selling price, variable cost and contribution margin of these
products I tried to find 333D Group Proprietary Limited and 3D Group
Proprietary Limited annual reports but none could be found on the internet.
This means that the selling price, variable cost and contribution margin is not
based on actual figures but target figures. My personal understanding of what
the term contribution margin means is the profit the company makes on an item
when all other costs have been taken out. With the first service the term
deposit the reason it differ over three years because of the investment they
invested into the term deposit and the interest rate at the time when it needed
to be re-invested. As time went on Oz Brewing at more expenses than revenues
which meant they had to pay their bills using the money they had invested. Companies
have different contribution margins which depend on how well the product or service
sells to their clients and what their costs of producing the products in bulk
are. Some produces the more you produce the cheaper it is which means they can
sell the product at a reasonable price and get a higher profit/contribution
margin for the product. Companies produce both products with high and low
contribution margins as a tax deduction and also if the lower contribution
margin products are the products the clients come in to buy.
Identify one or more resource constraints
Oz Brewing Limited may face
Oz Brewing Limited has a variety
of resource constraints that they will be facing to acquire 333D Group
Proprietary Limited to produce revenue. Firstly, would be the shortage in
funding that Oz Brewing Limited has. Over the last four years Oz Brewing
Limited has made a number of horrible decisions that has left the company with
a cash and cash equivalent of $26 192. Secondly, would be the shortage in
revenue that Oz Brewing Limited has. Over the last four years Oz Brewing
Limited has no revenue from products that the company has sold which means that
have relied on the financial assets that Oz Brewing Limited has. This strategy
was alright for the first year but not for four years because with all the
outgoing expenses they have eaten up their cash supply which means it is going
to be hard for Oz Brewing Limited to start a new venture with limited cash. Therefore,
these constraints are relevant when deciding to produce and sell the three
products that are mentioned above. The company needs to budget their assets
because there is no revenue coming into the busy until the 3D printing starts
making money for Oz Brewing. The shortage of cash relates to how big Oz Brewing
Limited can be and how they are going to supply their clients because they do
not have the financial assets to support themselves in a new venture.
