ABC Pty Ltd (ABC) is a start-up founded by Zac, who has a vision to promote cultural understanding through its product range. Initially, the business will focus on one product.However, the long-term plan is to add a multitude of different products from differentcultures, each produced by people of that culture living in a country not of their origin but now their home. These producers will share a cultural story associated with their product.
Zac is seeking your help, as a management consultant, with the initial business financial plans. Your task is to present the following to Zac:
- A CVP analysis using monthly sales units with a brief interpretation and implications for the business.
- A monthly cash budget for the first 6 months of operation (November to April) based on Zac’s initial forecasts and estimates, along with a brief interpretation that explains any major implication(s) for the business.
- Point out financing needs and suggested financing sources.
Zac spent $1,000 in September to set up the company, choose an initial product, negotiate with potential suppliers and undertake market testing. Based on this initial research, Zac has forecast unit sales and unit purchases for the first six months of full operation, which will start in the first week of November. These forecasts are shown in the table below.
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