Compare the Forecasted Benefits with Actual Business Results (Other (Not Listed) Sample)

Compare the Forecasted Benefits with Actual Business Results
Introduction
A cost analysis is an approach that is used to determine if an investment business is sound and to help compare the forecasted benefits with actual business results. Jess as a sole proprietor prepared a forecast to help her analyze the basic costs.
Linda’s hourly rate
According to the cost analysis forecast, Jess expects to spend $20,000 on salaries. Considering that Linda is the only employee who worked with Jess in the cafe, it means that $20,000 is the amount that Linda gets paid annually. Linda works on weekends only for 30 hours (15 hours on Saturdays and 15 hours on Sundays) and $20,000 is the annual pay. A year has 52 weekends and, on each weekend, Linda works for 30 hours. Therefore, the total number of hours per year that Linda works equals; 52×30= 1560 hours. The hourly pay therefore is equals to total salary $20,000 divided by 1560 hours.
98742523685500 $ 20,000
1560 hrs
The hourly rate=$ 12.82/hr
Superannuation
To receive a superannuation, it is a condition that an employee makes $450 or more in a month (Chomik and Piggott, 2016. p486). Linda makes upto ($ 12.82 ×30 hours× 4 weekends in a month) $1538.40 per month so she is entitled for a superannuation. Jess need to pay 9.5% of Linda’s earnings into her account whether she has a casual job or not. The amount to be paid per year will be;
96837523368000 9.5 ×$ 20,000
100
Amount payable as superannuation =$1,900
Decision to Part-time Job or Casual Job
Salary plays a big role when making a decision on the type of job to take. However, there are other factors that should be considered to help in analyze a job offer. Such factors include;
Salary
It is a key aspect in a full-time job since this is where most of the time is committed. There should be a monetary return for the time invested in a job. Linda should analyze the salary she would get from the cafe alone (as a full-time job) is worth and if it is able to settle her bills and other expenses.
Growth opportunities.
There should be a career progression in a full-time job. Before Linda makes a decision to work full-time for the cafe, she should consider whether her knowledge and skills are developed in that job in line with her career. A full-time job should be a stepping stone to greater opportunities to enhance growth of her career. If the job Linda is assigned in the cafe is in line with her career, she should consider making it a full-time job.
The perks and benefits of working for the cafe.
These are non-monetary benefits that are offered to a full-time employee. A good company to work for as a full-time employee should have employees benefits like medical covers, leave days and discounts among others. Linda should compare and contrast the benefits she would get from her full-time employment at the cafe with the benefits she gets from her casual job. For example, she has off days in her current employment so that she is able to work in the cafe as a part timer. She should put into consideration if she is going to get such benefits. The wrapping up before committing to a full-time job. These are the things that are considered as little but matters a lot in job satisfaction. There are questions that Linda should consider; is the job for her? Such questions should help her determine which offer best suits her.
Advantages and Disadvantages of Partnership
A partnership is a business owned by two or more individuals (Lisjanto, 2018, n.p). If jess and Linda partnered to manage the cafe, the business would have changed from a sole proprietorship to a partnership. Partnership has several advantages over a sole proprietorship. First, it brings together two talented individuals to share responsibilities. This is considered as an advantage because people have different talents and combined talents from different individuals can give a maximum output. Second, financing is made easier. In a partnership, finance resources can be drawn from different individuals. For example, if Jess was the sole source of finances and she have made a partnership with Linda, she also becomes a source of finance. Apart from contributing finances, Partners can also contribute their personal finances to secure a loan.
Partnership encourages division of labour which enhances productivity and flexibility. Example, a partnership between Linda and jess would allow each of them to specialize in her area of expertise to give maximum production. If Jess works better in managerial activities but poor in making beverages, she could leave the task to Linda who can perform it better. Finally, in a sole proprietorship the continuity of a business depends on the life of the owner, in this context the existence of the cafe largely depends on Jess and if Jess dies, the business cannot operate anymore, but in a partnership, two partners can legally agree to continue the business even one partner dies.
However, a partnership business has some disadvantages. First, as partners each one is expected to contribute to decision making. Considering that people have different opinions, decision making can lead to disagreements and conflict may arise. If Jess and Linda partners in the cafe business, each one would expect that her decision be considered and they may fail to agree. The disagreements and conflicts that arises may jeopardize the continuance of the cafe. Second, with partnership there is also sharing of profits. That means that if Jess and Linda are partners, they should share profits. This can also be a source of conflict because one of them may feel she is working more than the other. In most cases, profits are shared equally so the one who feels working more than the other may not feel rewarded according to her efforts. Another limitation of a partnership business is that a partner is liable for other partners actions and if the actions result into a loss in the business, the loss is to be shared equally amongst them. Finally, there is unlimited liability of the partners. If Jess and Linda enters in a general partnership, it means that Linda’s personal resources would be at risk if debts and losses are incurred because the business does not have a separate legal entity.
Break-even Point
At break-even no profit is made and the sales revenue is the same as total expenses incurred. To calculate profit;
Profit= (contribution margin) no. of cups –Fixed costs.
Contribution margin is the variable part of a cost basically a cost has two parts; fixed and variable part, the variable is also known as contribution margin. From the cost anaysis forecast, it is estimated that the cost of 1 cup of beverage is $1. This is the fixed cost of a cup of a beverage. The Contribution margin therefore will be; $4(total price of 1 cup)- $1(fixed cost) to get $3.
Profit= $(4-1) × no. Of cups- Fixed costs.
Fixed costs are the costs that must be incurred whether the cafe makes a profit or loss.
Fixed costs therefore= $38,000+$12000+$20000+$5000
=$ 75000
To break even;
$(4-1) no. Of cups- $75,000=0
$(3) no. Of cups = $75,000
The cafe therefore requires to make 25,000 cups to break even.
Taxable income
Income tax is charged from the income of individuals such as salary and other employment benefits. A sole proprietorship business is considered as not separate from the owner and any profit from such a business is subject to an income tax. If Jess sells 50,000 cups of coffee, she will make a profit of;
Profit= contribution margin ×no. of cups- fixed costs
=$(4-1) 50,000 cups-$ 75,000
=$3(50000)- $75,000
=$150,000-$75,000
Profit=$ 75,000
Jess therefore would pay a tax of;
According to Australian tax system, both individuals and businesses are taxed on a given scale, from an income of $75,000 and as a resident of the county, Jess would pay the following tax;
Tax payable
0-$18,200 NIL 0
$18,201-45,000 19 cents for each over 18,200
Jess has an income of 75,000 so under this bracket she would
Pay a tax of (45,000-18,200) ×19 cents
=26,800 ×0.19
=$5,092.....................................................................................................$5092
45-001-120,000 5092+32.5 cents for each 1 over 45,000
Jess’s income of 75,000 falls in this bracket. The amount of money that exceeds
45,000 is (75,000-45,000) to get$ 30,000
Therefore, the total tax that Jess pays is;
5,092+ (0.325×30,000)
=5,092+9750
=$14,842
If Jess sells 50,000 cups of coffee in the year, she is required to pay a tax of $14,842.
Credit Cards
A credit card is a card that helps people to make purchases with a promise to pay for them later. A credit card will help Jess to make purchases without using her cash and savings and she will only make purchases and at the end of the month get a bill for all the expenses from the card issuer. Incidental expenses on the other hard are the minor expenses that are made from the main activities. Jane as a single lady living at home can make the following incidental purchases. Travel expenses, lodging expenses and meals expenses.