Chosen Project: Cost of Project: Cash Balance at 31 Dec 2020: Cost Management Strategy 422,604 By switching suppliers, the unit cost to purchase sunglasses will drop by 30% while the unit cost of prescription glasses will remain the same. James would like to keep the selling price of sunglasses the same. Due to the slightly less well known branding of the glasses, James believes that sales volume for the sunglasses will fall by 20% for each month in 2021 compared to the corresponding month in 2019. (e.g. Jan 2021's growth/decline is based on Jan 2019, Feb 2021's growth/decline is based on Feb 2019 etc). James believes that the prescription glasses don't make enough margin and so he would like to increase the selling price on prescription glasses by 10%. James believes that due to the increase in selling price, prescription glasses sale volume will decrease by 10% for each month in 2021 compared to the corresponding month in 2019. As a result of the decrease in prescription glasses demand, James estimates the eye-test service volume will also decrease by 20% for each month in 2021 compared to the corresponding month in 2019. The selling price of eye-tests will remain the same. The catch with the new supplier is that there will be a more stringent credit term in purchases of inventory. All purchases with the new supplier are still on a credit basis, however, 90% of the amount needs to be settled in the same month of purchase with the remaining 10% settled one month later. For credit term in sales of glasses, the business plans to continue its instore credit policy for their customers. To further reduce costs, James would like to reduce the salary of some staff. Specifically, he would like to reduce the office staff's and sale assistants' salary by 10%. The business will also be implementing 'green' measures to reduce the utilities consumption of water, gas and electricity by 20%. James also believes the business insurance has been a waste of money as they have never needed to make a claim. He plans to change the insurance policy to reduce the annual premium by 50%. All these increases/decreases are relative to 2019 amounts. All other fixed costs will decrease by 10% based on 2019 amounts. After the 1st year of the new project, in 2022, both the service volume and sales volume are expcted to increase by 5% for each month in 2022 compared to the corresponding month in 2021.