EduNinja1. Hafs
Hafs is a new cooperative. It plans to manufacture wastepaper bins for the household market.
Hafs has forecast its sales in 2021 as 25000 units. Its forecasted break-even chart is shown in Figure 1.
Figure 1: Forecasted break-even chart for Hafs for 2021
State two features of a cooperative.
Other than financial security, explain one advantage and one disadvantage of Mr Carroccio operating as a sole trader (line 5).
1. Suparman Fish ( SF )
Gepa Suparman owns and operates four fishing boats in Indonesia. There is a growing demand for canned (tinned) food, including cans of fish. Gepa wants to enter the secondary sector by opening a small factory producing cans of fish.
Gepa's business will be called Suparman Fish ( S F ) and will be a private limited company. Gepa will own all of the shares. The factory will be located in a village three miles from the harbour. Because unemployment is high in the village, Gepa should easily find workers for the new factory. In addition to the manager's salary, workers' wages, and the cost of fish, supplies, and cans, S F will have the semi-variable cost of electricity.
Gepa has prepared a four-month cash-flow forecast based on the following information:
- opening balance month 1: $ 15000.
- month 1 : sales revenue of $ 1000, increasing by 20 % per month.
- manager's salary: $ 300 per month.
- workers' wages: $ 175 per worker per month.
- variable costs (fish, supplies, and cans) are equal to 40 % of sales revenue.
- semi-variable cost of electricity: fixed cost of $ 100 per month, plus a variable cost of $ 0.10 per kilowatt hour (kwh). Month 1 usage: 100 kwh , increasing by 10 % each month.
Although S F would create several jobs in the village, many residents are not happy about the new factory. The new factory would use chemicals, which cause pollution. Residents are concerned about the unpleasant smells from the factory. A representative from the local employment office is concerned whether Gepa's factory will provide a safe working environment.
Identify two advantages to S F of being a private limited company.
1. Office Cleaners (OC)
Sayaka Toguchi operates an office cleaning service, which is in the tertiary sector. When office workers are going home, she arrives at their offices to clean them. At present, she has four clients, with commercial offices all located in the same building. She operates as a sole trader and has no employees. Her business name is Office Cleaners (OC).
Sayaka has always liked the small size of her business. However, when a large bank on the ground floor of the same building where her current clients are located offered her a contract to clean its offices, she decided to reconsider the size of her business. The bank would loan her $ 2500 to purchase new cleaning equipment. The bank would also offer her a two-year contract paying her $ 6000 every second month. Sayaka would need to employ one new worker to clean the bank.
For the bank contract, Sayaka forecasted the following monthly cash outflows:
- salary for one new employee: $ 2000
- cleaning products (soap, detergent): $200
- payment on equipment loan: $ 150 payable from the second month
- business taxes and overheads: $ 300.
Before the bank loan she currently has personal savings of $ 1600 in the bank.
Employee absence also worries Sayaka. How will she get all the offices clean if her new employee is absent from work due to illness? Agencies can provide temporary employees but they cost $ 300 a day per worker.
Identify two features of a sole trader.
Describe two advantages to M S S of being a charity (line 14).
1. Belluno Frames (BF)
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Belluno Frames ( B F ) manufactures high-quality frames for glasses (spectacles). Like many other firms in the private sector in northern Italy, the business is small, family-owned, and operates as a private limited company. Giovanni and Elda Rizzo own 100 \% of the shares, nherit. Giovanni designs the frames. Antonio and two employees which their son Antonio will inherit.
B F is located in a building that Giovanni and Elda own, near their house, 42 kilometres outside of Belluno. Antonio and the two employees live in the same village as B F. The road to Belluno is narrow, with traffic that moves very slowly because of farm vehicles. Antonio, who wants the business to grow, has asked his father to rent a building in the industrial park in Belluno with good road access. BF's new location would be closer to suppliers and customers. It would also improve B F 's visibility.
Currently, B F sells on average 1300 frames per month. Each frame is sold at an average price of € 24. Below are the costs (all figures in € ) for B F at its current location and if it moved to the industrial park in Belluno.
Monthly fixed costs:
Variable costs per frame:
Antonio believes that B F 's sales will grow on average to 1700 frames per month in the new location. To reach that level, Antonio suggests that B F offer extra financial rewards in addition to their usual salaries to employees after 1300 frames have been sold each month (the current monthly average). Giovanni and Elda are reluctant.
Define the term private sector.
Identify two advantages for B F of operating as a private limited company.
1. Jill's Gloves (JG)
Jill's Gloves (JG) is a sole trader owned by Jill McAloon. The business makes and sells ski gloves. JG sells each pair of gloves for $ 20.
Jill has forecasted sales in 2022 to be 20000 units. She has also projected the fixed costs (Table 1) and variable costs (Table 2) for that year.
Table 1: Projected fixed costs for 2022
Table 2: Projected variable costs per pair of gloves for 2022
Jill expects a 10 % increase in her fixed costs and a 5 % increase in her variable costs in 2023.
State two features of a sole trader.
2. Bangkok Shrimp (BS)
In 2011, an environmental catastrophe contaminated the waters off the coast of South America, one of the main fishing areas of the world. As a result of the catastrophe (and the resulting lower supply of shrimp), the price of shrimp worldwide increased by 30 %. Aroon Bhuvanadh, owner of Bangkok Shrimp (BS) located in Thailand, saw this as an excellent opportunity to expand his business. He decided to increase the number of his shrimp boats from two to three in order to benefit
from the higher prices and profits.
[image: http://commons.wikimedia.org/wiki/ File:Prawn_\%28PSF\%29.png; Pearson Scott Foresman]
The price of the new shrimp boat is $ 175000. If the selling price of shrimp remains at the current high levels, anticipated profits per boat after all expenses would be $ 35000 per year. If prices fall to pre-2011 levels, the profit would decrease to $ 10000. Aroon's bank will provide finance for the new boat. If the new boat is properly maintained, it will last longer than the proposed seven-year term of the bank loan.
Aroon captains one of the existing boats. He currently employs an experienced captain for the second boat, and he will have to recruit an additional experienced captain for the third boat.
Aroon's wife Kanya is worried that the price of shrimp may return to pre-2011 levels before the bank loan is repaid. For this reason, she wants to change the legal structure of the business from a sole trader to a private limited company.
Aroon has a vision: by taking advantage of the opportunity of the current high shrimp prices, he will own three shrimp boats and, later, can leave one boat to each of his three sons when he and Kanya retire in 2017.
Identify two advantages and two disadvantages of changing the legal structure of B S to a private limited company.
Explain the advantages for Su of forming A S as a private limited company.
Answer the following question.
With reference to Craig Chapman's orphanage and to one other non-profit organization that you have studied, explain two objectives of non-profit organizations.