Zoe's Fresh Flowers is new business ready to open a store in the Westfield shopping centre nearby. Westfield has a number of florist shops already, so Zoe is anxious about the demand for her flower arrangements. Westfield has two options available for rental contracts: a) A standard fixed rent agreement of $10,000 per month; or b) A commission contract based on 25% of sales revenue with $6,000 per month minimum rent. Zoe estimates that a bouquet will sell for $100 and have a variable cost of $49 to make and a 15% sales commission for the shop attendant. Required: 1. What is the break-even point in units under each rental agreement? 2. Zoe is uncertain if she will sell 200, 400, 600, 800 or 1000 arrangements per month. Show a table that shows the expected profit at each sales level under each rental agreement. For what range of sales levels will Zoe prefer: (a) the fixed rent agreement or (b) the royalty agreement? 3. If Zoe signs a sales agreement with a local street vendor rather than Westfield, it will save her both rental contract options and sales commission. However, she could only sell the flower arrangements for $60 to the vendor. Explain how would this affect your answer in requirements 2?

Part B : Xylia Ceramics makes and sells decorated vases for flower arrangements. As part of the master budget, following information is available for 2024:

January February March April May June Estimated Sales 14,000 16,000 12,000 13,000 14,000 15,000 Sale Price $69.00 $69.00 $71.00 $71.00 $73.00 $73.00 Direct Manufacturing Labour Hour (DMLH) per unit

1.25 1.25 1.5 1.5 1.2 1.2 Wage per DMLH $19.00 $19.00 $22.00 $22.00 $24.00 $24.00 Cost of Materials $20.00 $20.00 $22.50 $22.50 $25.00 $25.00 XylixZa Ceramics expects to have 7,500 vases on hand at 31 December 2023, and it has a policy of carrying an end-of-month inventory of 50% of the following month's sales. July 2024 sales are expected to be 16,000 vases.

Document classification: Internal Page 3 Kaplan Business School Assessment Outline Required: 1. Show a sales budget, production budget and a direct manufacturing labour budget for Xylia Ceramics month-by-month for the first 6 months of 2024. The direct manufacturing labour budget should include labour-hours and total cost. 2. Provide 3 recommendations to Xylia Ceramics to assist with improved profitability and explain how they will be successful.