Task Instructions

Casey Chamberlin is considering opening a manufacturing business, in either Penrith or Gosford. Casey has asked you to analyse ABS and other data, to assist her with deciding, as well as to help her calculate some of her business expenses. Casey has asked you to answer three questions.

The relevant Australian Bureau of Statistics (ABS) data can be found at the following locations (ctrl + click to open). Links are also provided on the Moodle in the assessment tab.

Dataset 1 Penrith Dataset 2 Gosford

Assessment 3 Business Maths and Statistics

Part 1 Employment and Incomes

To determine where she should set up her business, Casey wishes to know some key information of the two areas that she is interested in, namely Gosford and Penrith.

i. Casey wants to know how many people in each region are of working age (15-64) and whether this is growing over time. Casey asks that you include graphs showing this population change over recent years. Include a statement of whether you believe this population is increasing, decreasing or neither in each region, based on your graphs. Casey has asked you to comment on which region is seeing the highest growth rate in this metric.

ii. Casey is also interested in the average (mean) employee income earned by all people working in these two regions and asks that you include graphs showing any changes over recent years.

iii. Finally, Casey is interested in how many manufacturing businesses are in each region. She asks you to provide the mean number of businesses in the manufacturing sector for 2015- 2019 for each region, and to also report the range and sampling standard deviation for the number of manufacturing businesses in those years.

Part 2 Business Expenses and Revenue

Caseys business Idea is to produce replacement parts to supply other businesses in some area. To set up her business Casey needs to purchase equipment. Casey has a quote for a 5-axis mill of $300,000. To purchase this, she will need to take out a loan. Her bank is offering a 6% P.A interest rate over a period of 5 years with monthly repayments, whereas the company selling the mill has offered a monthly repayment option at 5% P.A over 7 years.

Note: You must show your working to receive full marks in this part.

i. For both loans determine the monthly repayment amount.

ii. Calculate the total amount paid under either of these two loans, and the total amount of

interest paid. Advise Casey which loan you recommend. Provide justification.

Based on a preliminary budget, Casey believes her fixed monthly running costs include the monthly repayments for the loan you advised her to take, $4,800 fortnightly for two employees (you may assume there are two pay cycles in a month), and $6400 rent for the workshop. Casey also has variable costs of $15.20 per part for materials, and $3.30 per part for electricity costs, and $1.00 per part wear-and-tear on her machinery.

Casey believes that she will be able to produce a maximum of 15 parts per day. She wants to sell her parts at a price of $79 each as she feels that she will be able to sell most, if not all, of what she produces in a given month.

iii. Given the information that Casey has provided, inform Casey on how many parts she must sell to break even each month.

iv. Explain to Casey as to whether her current price of $79 at a manufacturing capacity of 15 parts per day is enough to make profit each month (month = 30 days). Explain to her how much profit/loss you expect her to make?

v. Casey was hoping to make a profit of $12000 each month. Advise Casey whether she should increase production (units) per day, or increase her price, to reach her profit target. Justify your advice with calculations.

Part 3 Asset Depreciation

For her business tax, Casey has a series of lathes that she needs to depreciate. Each lathe cost her $8,200. Casey wants to know what the differences between the prime cost method and diminishing value method would be on its depreciation. She is requesting a graphical depiction of the differences. She has provided some information below.

According to the 2020 Australian tax organisation (ATO) data on lathes, the effective life of manual lathes is 20 years

i. To show Casey the difference between the two methods, you will need to show her the amount of depreciation for each year for the 20-year life span of a single lathe using the prime cost and diminishing value method. Casey wishes to see this shown graphically, ideally both depicted on the same graph (choose whichever graph type you feel is appropriate, include your raw data in a table for Casey alongside the graph, and assume each year is 365 days). Include a statement to Casey on whether you believe one method is better suited for her.

ii. Casey mentions her purchase date was the 6th January 2021. She would like to know the amount of depreciation of the lathe to the end of the current financial year (30th June 2021), via each method.