Phionia’s Finicky Feline Gourmet Cat Dinners After developing a gourmet cat food, eaten by the most finicky felines, Phionia Phelps has an opportunity of a life time. Her wealthy acquaintance wishes to invest $50,000 into her business in exchange for selling her products on her website. In addition to already selling to her close acquaintances, Phelps has an opportunity to grow her thriving business, but is it worth it? Careful analysis of her current sales and expenses is necessary to see if the investment is worth making, and although she currently has sales and makes a profit of $70.00 per case, it is not certain if it is enough to continue and make a profit. The following chart shows Phelps profits, costs and sales from January
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Continuing this way, will eventually put Phelps’ business under water and unable to survive, she must make some changes, and needs to make some tough decisions in order to have her business survive. As the months continue and her volume increases, her losses decrease to a final loss in June of $3,943.44, but still not producing a profit company. Providing these facts to her acquaintance, Phelps may feel defeated and question her interest in investing into her company. In order to turn around and begin making a profit, Phelps will need to carefully look at her expenses, overhead, employees, their pay rates, and her raw materials she is purchasing for each product. A balanced budget arises when the entity estimates the same amount of money from revenue collected as it is appropriate for its expenses (Ives & Calabrese, 2011). Phelps needs to balance her budget and ensure her expenses are not superseding her revenue, which unfortunately they …show more content…
Her $6000 overhead alone, is depleting the profit she is making and starting every month in the negative for Phelps. It may be wise to search out other avenues for her store front, as the overhead is costing her any and all her profit, and she yet has to pay any employees. Taking product, production and labor Phelps begins January with a cost of $8,181.19, which does not include her overhead, nor a paycheck for herself. Although Phelps is doing something she loves, the business she has created is costing her more than she is making. Having the $50,000 investment will certainly get her in the positive for her budget, but changes need to be made internally or within a few short months she will be in the same predicament she currently is in. Researching what potential sales she could sell using her acquaintances online website, will need to be carefully analyzed. Is being online enough to make a profit, or does Phelps need to go further in her distribution and approach local and large pet stores? Increasing her production will increase her expenses, but it will positively increase her
Continuing this way, will eventually put Phelps’ business under water and unable to survive, she must make some changes, and needs to make some tough decisions in order to have her business survive. As the months continue and her volume increases, her losses decrease to a final loss in June of $3,943.44, but still not producing a profit company. Providing these facts to her acquaintance, Phelps may feel defeated and question her interest in investing into her company. In order to turn around and begin making a profit, Phelps will need to carefully look at her expenses, overhead, employees, their pay rates, and her raw materials she is purchasing for each product. A balanced budget arises when the entity estimates the same amount of money from revenue collected as it is appropriate for its expenses (Ives & Calabrese, 2011). Phelps needs to balance her budget and ensure her expenses are not superseding her revenue, which unfortunately they …show more content…
Her $6000 overhead alone, is depleting the profit she is making and starting every month in the negative for Phelps. It may be wise to search out other avenues for her store front, as the overhead is costing her any and all her profit, and she yet has to pay any employees. Taking product, production and labor Phelps begins January with a cost of $8,181.19, which does not include her overhead, nor a paycheck for herself. Although Phelps is doing something she loves, the business she has created is costing her more than she is making. Having the $50,000 investment will certainly get her in the positive for her budget, but changes need to be made internally or within a few short months she will be in the same predicament she currently is in. Researching what potential sales she could sell using her acquaintances online website, will need to be carefully analyzed. Is being online enough to make a profit, or does Phelps need to go further in her distribution and approach local and large pet stores? Increasing her production will increase her expenses, but it will positively increase her