Question
Louise is setting up her own marketing business. She has done some research about the start-up and ongoing costs. Use the following information to answer
Louise is setting up her own marketing business. She has done some research about the start-up and ongoing costs. Use the following information to answer the questions below. Based on the information below, answer the following questions. Use the space below to work out your answers and provide an answer to each. Leasing costs of the premises approximately $2,500 per month ($5,000 on signing of the lease). Purchase of stock/raw materials about $20,000 prior to start up and $20,000 per month thereafter. It is also expected that the stock will sit on the shelf for an average of 2 months and will be sold on terms of 30 days credit. Wages approximately $173,000 per annum. Superannuation costs approximately $15,570 per annum. Accounting and taxation costs likely to be $3,795 to set up the business structure. Ongoing annual costs $2,500 (paid quarterly) for the businesss compliance and taxation matters. Initial legal costs $700. Promotion and advertising $1,200 prior to start up, and $2,000 paid two months after start up. Installation of telephone, fax and Internet lines total of $450. Running costs of telephone, fax and Internet total $550 per month. Motor vehicles costs calculated at $20,000 per annum. This includes leasing costs. Electricity and gas installations approximately $275. Running costs expected to be about $650 per month. Licenses and permits $395 per annum, paid prior to start up and then annually. Bank charges expected to be around $300 per annum, paid monthly. Insurances $3,750 per annum (including WorkCover), to be paid prior to starting operations and then annually. It is expected that $100,000 will be borrowed. Monthly repayments will amount to approximately $2,166, made up of $1,328 capital repayment and $838 interest expense. A contingency sum for sundry expenses has been set at $210 per month.
a) What are the start-up costs of this business, according only to the information presented above? Start-up costs are those costs that are required in order to open the business/start operating
b) What are the monthly expenses, considering only expenses that are paid monthly?
c) What are the annual expenses, considering only expenses that are paid annually?
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