Step 3

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.