Income Statement for Sheffield Aerospace Materials for the year ended 31^st October 2022.

Revenue		13,340,000
Cost of Sales		(6,450,000)
Gross Profit		6,890,000
Selling + Distribution Expenses		(2,390,000)
Administration		(1,950,000)
Net Profit		2,550,000

Statement of Financial Position for Sheffield Aerospace Materials as at 31^st October 2022.

Non-Current Assets
Land & Buildings	9,750,000
Vehicles	320,000
		10,070,000
Current Assets
Inventories / Stock	1,345,000
Trade Receivables	550,000
Cash / Bank	2,250,000
		4,145,000
Total Assets		14,215,000
Current Liabilities
Trade Payables	1,945,000
Non-Current Liabilities
Bank Loan	4,000,000
Capital and Reserves
Shares	1,000,000
Retained profits	7,270,000
Total Liabilities		14,215,000

APPENDIX 2 – Key Product Information Sheet

Information relating to Scenario 1 – Product Epsilon

Estimated Sales 8,500 units

Selling price per unit £175

Direct Material Costs £65 per unit

Selling Costs £435,000

Admin Costs £225,000

Production Capacity 9,500 units

Accounting Additional Information

Additional information related to Sheffield Aerospace Materials required to update the Statement of Financial Position:

Increase in land and buildings £800,000

Increase in trade payables £250,000

Loan obtained on 1^st November for £275,0000

Additional Profit £xxxx (to be calculated based on revenues and costs above)

Assumptions

There will be no change in the cash balance held by the company. There will also be no change to the level of trade receivables

Tax can be ignored.

Investment Appraisal Additional Information

Total Investment £1,050,000

Assume Total Revenues of £1,487,500 per year, Direct costs £552,500 , Selling Costs of £435,000 and Admin costs of £225,000

The finance director has estimated the cost of capital is 11% and the product would be on sale for 5 years.

Calculate:

The contribution per unit

The break-even point and the margin of safety

The required number of units to hit target profit.

Clearly explain each figure you have calculated and what this means for the firm.

If the firm makes the target profit based on estimated sales and the additional information in appendix two produce a revised Statement of Financial Position.

(30 % weighting)

Calculate the Payback Period and Net Present Value for the product.