Markup Calculation
We use cost-based method for our markup calculation. Our markup percentage
is 40% which will cover expenses and generate the desired net profit. The initial cost for
a 340 gram (small) bottle is $1.88, and a 570 gram (large) bottle is $ 3.13. This cost
includes manufacturing, bottling, and labeling. The cost to retailer is $2.63 for , and
$4.38 respectively.
Income Statement
In the first year, we target to sell 10,000 small bottles and 5,000 large bottles,
and the production cost is $25,680. The sales of all 11,000 bottles will generate
$35,930. Therefore, our gross profit will be $10,250.
The selling expenses are marketing expense and shipping expense. They will be
$1,000, and $3,099 respectively. The shipping expense is a variable expense which will
be changed corresponding to the number units sold.
Other expenses are processing fees which is $25, product development expense
which is $950, and expense for sample products which is $50. These expenses are
one-time expenses. In other words, these expenses will occur only in the first year of
business.
Tax expense will be $1,293.90.
The net profit for the year 2015 will be $2,208.10.
Balance Sheet