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We researched all the costs involved in making our rain ponchos in detail but someaspects are estimates. Our ponchos are made by a company based in Britain to massproduce the ponchos.

We are making 500,000 rain ponchos as this is approximately 6.5% of the totalnumber of tickets that will be sold for events during the London 2012 Olympic Games.

Marketing

We want to advertise on the buses and trains which are the main route of transport tothe Olympic Games in London 2012. On the insides of 60 buses there will be postersdetailing the main aspects of our business to encourage people to buy our ponchos.Also 325 posters will be placed inside trains. The total cost for the posters in 60 busesis 10,000 and the 325 posters placed in trains will cost 65,000 (sources:www.tfl.gov.uk; www.brent.gov.uk). The total cost for our marketing is 75,000. Also,on the sides of our 160 vending machines throughout the capital will be colourfuladverts.

Cost for making the ponchos:The Poncho

To work out the price of making the ponchos we researched the cost to mass producestandard ponchos and added on an extra 250% to cover the costs of BioPol (a newlydeveloped biodegradable plastic) and the coloured printing of the national flags.Through this, we came up with a cost price of 0.55. For 500,000 ponchos the costwill 275,000.

Labour Costs

Our labour costs for produces the ponchos are low because once set up the machinerequires little manual labour just supervision so for the labour we are spending4,000 which covers the labour costs for making 500,000 ponchos. We also need topay the 16 part-time employees whose job it is to fill the 160 vending machines. Perhour we are proposing to pay each employee 8.50 an hour. For each employee wehave a special cart from which they can fill the machines. For the 16 days of theOlympic season we will employees working for 6 hours. At 8.50 per hour for 6 hoursa day for 16 days each employee will be paid 816, the 16 carts cost 240 and thefactory labour costs are 4,000, bringing the total labour costs to 17,296.

Start-Up Costs

Because most of the machinery is already there, we only need to buythe printing machine to print the ponchos with the national flags. Thecost of this machine is 5,598.

http://www.tfl.gov.uk/http://www.brent.gov.uk/http://www.tfl.gov.uk/http://www.brent.gov.uk/

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Overheads/Factory Costs

Our estimated total cost for these is 5,650

Vending Machine Costs

At our peak sales, well need 160 vending machines which cost 15.40 weekly permachine. The total cost therefore is 7,392.

So the total costs are:

75,000 marketing

275,000 the poncho

17,296 labour

5,598 machinery

5,650 overheads/factory costs

7,392 vending machines

The total cost for everything involved in producing and selling the ponchos is385,936.

This money we will have to raise through a bank loan and a government grant of50,000.

A short-term bank loan would be taken out for 335,936; this would be paid for afterthe 16 days of the Olympic season.

The lowest amount of interest payable for this type of loan is 4.5% bringing the totalto be repaid to 351,053.12.

The Selling Price

We have decided to make the selling price of the ponchos 2.00 as this is the bestcompromise between making a profit and being cheaper than our competitors. Ourprofit per poncho therefore is 1.45.

Days SalesNumber

Revenue Costs (includesinterest)

Profit/ Loss

1-2 20,000 40,000 401,053.12 -361,053.12

3-4 40,000 80,000 -281,053.12

5-6 65,000 130,000 -151,053.12

7-8 85,000 170,000 18,946.88

9-10 100,000 200,000 218,946.88

11-12 70,000 140,000 358,946.88

13-14 70,000 140,000 498496.88

15-16 50,000 100,000 598,946.88

Totals 500,000 1,000,000 401,053.12 598,946.88

75% of our profit goes to Right To Play UK, a charity who focus on using sport as a

tool for the development of children in the most disadvantaged areas of the world. A

total of449,210.16 goes to Right To Play UK.

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