Analysis of cost of sales

Analysis of cost of sales

Before starting any business, the capital forecast is very crucial since the owners of such enterprises must understand all the financial needs that are necessary for the startup and running of the company. The following is a 10-year capital forecast for within wellness business. This is the minimum capital that is needed for the startup and smooth running of this business. The following table shows the Within Wellness Cost of Sales Summary (which represents the 10-year forecast for the capital needs for the whole business organization)

Analysis of cost of sales

The cost of the sales summary represents the total capital forecasted per year that is needed for the smooth running of the business. For instance, for Within Wellness to run smoothly in 2017, it required a total capital of at least 1,070,381 dollars.

Some of the critical requirements of cost of sales summary include the essential basics without which business cannot operate, such capital basics include; salaries and wages to pay employees, building and equipment that consists of the offices and storage space, cost of supplies and others ( including other operational expenses).

Focusing on Within Wellness business organization, the starting capital needed for the business in 2017 in dollars. These include wages and salaries 617,658, Fringe Benefits 92,649, Supplies & Freight 56,825, services cost of 50,000, Building &Equipment 180 000 and other requirements 70,000. The Total Cost of Sales for 2017 was 1,070,381 dollars and hence was the startup capital for the Within Wellness business.

Without this amount of capital, there is a possibility of business failure since the available resources are not utilized to their maximum.

One of the key resources for any business is labor resources. To hire and maintain employees, Within the Well signed an agreement with workers union whereby all the employees will be receiving a 3% increment annually except casual workers. The following table shows 2017 swages and salaries for Within Wellness employees per month. It also gives out total wages and salaries per year in dollars ($)

Within Wellness, human labor is one of the vital requirements as the business relies on repackaging and branding of vitamin supplements after receiving them from producers, after which such products are supplied to our clients. In the repackaging and branding of our products, we have 28 workers and nine other administrative employees, including human resource managers. With the extension of labor-management, there is a need to analyze the critical requirement for human resource manager, these include; Within

Wellness requires a human resource officer (HR) who understands its objects and expectations. For instance, HR should be in a position to lead other employees in achieving business objectives. For example, the critical purpose of Within Wellness is to ensure that they offer the best nutrition supplements (vitamins) to women for maximum satisfaction. For Within Wellness to achieve this, human resource manager needs to ensure that the nutrition specialist offers best nutrition advice to new clients as they select best combinations of supplements that will boost their immunity and health in general. HR officer should also leader workers involved in repackaging and branding to ensure that they come up with a high-quality combination of supplements that serves clients effectively. The same officer (HR) should further ensure that the supply of the products to customers has been carried out successfully, and payment is made effectively. Through this, the objective of the Within Wellness will be achieved.

Analysis of human resource future requirements

Since Within Wellness deals with direct services to its clients, including evaluation future demand and supply of human labor, the employees’ future skill required, the expected number of employees in the future, and the Within Wellness future strategic goals. In this way, the Within Wellness business will be in a position to understand the type of HR to hire. For instance, the level of education and level of work experience. Focusing on the future requirements of Within Wellness HR officer needs, the number of employees is expected to rise as a result of an increase in the number of repackaging and branding workers as well as an increase in the nutrition officer due to increase in the number of clients doing nutritional consultation before they can place their orders. Furthermore, the number of IT officers is also expected to increase. This is due to the increase in the orders placed online, and that needs to be processed and supplied.

Thus, Within Wellness requires high experienced HR officers with high-level education such that the hired human resource manager can organize a high number of employees to achieve the Within Wellness business objectives and even future expectations as the business expands.

Within Wellness measure of guardrails for operating expenses

This measure of how the business maintains operating expenses low while increasing output and profits. This is measured by measurement of the rate under which operating expenses increase by from one year to another. It can also be measured in forecasted operating expenses. The following is Within Wellness 10 year forecast for operating expenses.

From the table above, the average rate of change for 10-year forecast operating expenses of Within Wellness is 2.87. In other words, this is the average at which operating costs increases from one year to another as this business expands. For an average increase in operating expenses per annum > 10%, it is considered normal and manageable. Hence the 10-year forecasted operating expenses of Within Wellness will not be too high for the business to bear and are likely to contribute to the positive growth of this business.

Focusing on the fixed costs graph above, the fixed costs curve does no change from 2017 to 2020 and then it makes a sharp change of increase from 2020 to 2021, from 2021, the curve does not change up to 2026.

This is because fixed costs are the costs that do not change over a given period, such as the cost of rent, but they are bound to change at a higher or lower level, and once they have changed, the always stay for a long time without change.

The above graph shows the curve of 10-year forecasted variable costs of Within Wellness. The above curve shows a continuous increase in variable costs over time. This is because these costs change with time, and hence they are not fixed. For instance, the costs of wages and salaries vary depending on the number of hours a given employee has been on duty.