You plan to launch Financial Literacy ONLINE Non-Profit Organization in South America, a club that will target high school students, providing a safe and fun environment where they can learn about finances, such as budgeting, taxes, financial planning, and investing.

Question 1 - Build a Basic Financial Planning and The Economics of Your Business Venture (be creative with the numbers - think as if you were opening a new business.

Articulate the selling price of the product and/or service you intend to sell. If you have more than one product, articulate all their prices and include them in your financial planning. (0.5 point)

Variable costs are expenses that change in proportion to sales. The higher the sales volume, the greater the variable cost. Examples of variable costs are raw materials, packaging, labor directly associated with production, credit card fees, etc. List specific items of your business' variable costs. Break it down month-by-month for 2022. (0.5 point)

A fixed cost remains unchanged irrespective of sales volume. Examples are rent, advertisement cost, certain overhead costs, etc. List specific items of your business' fixed costs. Break it down month-by-month for 2022. (0.5 point)

Calculate the projected gross margins. Projected gross margin for 2023 = (Projected revenue for 2023 - Cost of Goods Sold for 2023) divided by the Projected revenue for 2023 (0.5 point)

Revenue = Net sales which is the proceeds from sales after accounting for returns and discounts.

Calculate your projected operating income, which is your total revenue for 2023 minus wages, depreciation, and cost of goods sold. (0.5 point)

Calculate the operating margin, which is your operating income divided by your revenue (i.e. net sales). Why is higher ratio better? Explain. (0.5 point)

Profit potential and durability. (0.5 point)

Describe the magnitude and expected durability of the profit stream the business will generate- before and after taxes- and reference appropriate industry benchmarks, other competitive intelligence, or your own relevant experience.

Address the issue of how perishable or durable the profit stream appears to be. Provide reasons why your profit stream is perishable or durable, such as barriers to entry you can create, your technological and market lead time, and environmental sustainability, which in some cases can be a driver for cost reduction.

Fixed, variable, and semivariable costs. (0.5 point)

Provide a detailed summary of fixed, variable, and semivariable costs, in dollars and as percentages of total cost as appropriate, for the product or service you offer and the volume of purchases and sales upon which these are based.

Show relevant industry benchmarks.

Months to breakeven. (0.5 point) Calculate the Break-Even point (units), which is Fixed Costs (Sales price per unit - Variable costs per unit)

Given your entry strategy, marketing plan, and proposed financing, show how long it will take to reach a unit break-even sales level calculated above.

Note any significant stepwise changes in your breakeven that will occur as you grow and add substantial capacity.

Months to reach positive cash flow. (0.5 point)

Given the above strategy and assumptions, show when the venture will attain a positive cash flow.

Show if and when you will run out of cash. Note the detailed assumptions can be found.

Note any significant stepwise changes in cash flow that will occur as you grow and add capacity.

EXAMPLE

Pro-Forma Statements for ABC Tourist Company ABC will sell 10-day trips to Benin at $4,500, respectively. ABC variable costs are lodging costs ( $1,000 per room per person), tour guides pay ( $1,000 per guide per 10 customrs), fees, and attractions (\$\$166.67 per customer). Break-even point (units) = fixed costs (sales price per unit - variable cost per unit) Break-even point (sales dollars) = fixed cost contribution margin Contribution margin = (sale price per unit - variable cost per unit) sale price per unit Pro-Forma Statements for ABC Tourist Company ABC will sell 10-day trips to Benin at $4,500, respectively. ABC variable costs are lodging costs ( $1,000 per room per person), tour guides pay ( $1,000 per guide per 10 customrs), fees, and attractions (\$\$166.67 per customer). Break-even point (units) = fixed costs (sales price per unit - variable cost per unit) Break-even point (sales dollars) = fixed cost contribution margin Contribution margin = (sale price per unit - variable cost per unit) sale price per unit