Product line Cost price Selling price Batch size Coffee Mug (CM) $8 $16 20 Paper weight (PW) $5 $10 10 T shirt (TS) $15 $30 30

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1 BUSINESS MANAGEMENT Modelling a Small Business Students studying Business Management at Central Senior College are going to run a business venture selling items with the school logo over a three month period July to September The business is to be called Logos Unlimited. The class has decided on the management structure of the business and appointed the CEO, Sales and Marketing manager and Financial Controller. These officials make up the executive which makes recommendations to the board (which is the class as a whole). It has been decided that each class member (25) will contribute $50 as capital. At the end of the venture, this will be refunded. Each student will receive a maximum dividend of $20. Any excess profits will be donated to a charity which will be decided on by the class. The students have decided that the items they will sell will be mugs, paper weights and T shirts. These will all have the school logo printed on them. A supplier (Screen ) has been found who will supply the items and print the logos on, but stock must be bought in batches, depending on the item. The mark up on cost is to be 100% Product line Cost price Selling price Batch size Coffee Mug (CM) $8 $16 20 Paper weight (PW) $5 $10 10 T shirt (TS) $15 $30 30 There are 800 students in the school, which is the total market available to the business. However, it has been decided that to aim to sell a total of 325 items would be realistic. The sales budget is as follows: Month Coffee mug Paper weight T shirt Total July 40 x x x August 40 x x x September 40 x x x The purchases budget is as follows: Month Coffee mug Paper weight T shirt Total July 40 x 8 15 x 5 50 x August 40 x 8 15 x 5 50 x September 40 x 8 15 x 5 50 x The T shirt is the most expensive item and has the highest profit level, so the marketing manager has decided that to encourage sales of T shirts, a free can of coke will be given to each purchaser of a T shirt (cost 75c each).

2 Advertising will be in the student daily ($5 daily) and in the parent s monthly newsletter, at a cost of $150 per month. A trestle table will be hired from the school each Thursday ($15 per week), to sell the items in the school yard. There are 4 Thursdays in July, 4 in August and 5 in September. (ignoring school holidays!) Plastic bags will be needed for wrappings. These will be purchased from the supermarket at a cost of 20 cents each 120 per month. The transactions for the business are as follows: Date Transaction Total July 1 Deposit capital into bank account 25 x $ Purchase of plastic bags for July, Bi-Lo Chq Bought stock (CM 20 x $8, PW 10 x $5, TS 30 x Chq $15) from Screen 1 Bought 24 cans of coke from Bi-Lo Chq Paid for advertising in student daily 21 days Central Chq Senior College 2 Paid for July advertising in Newsletter to Parent s Chq Association 7 Paid for 4 weeks hire of trestle table to Central Senior Chq College 7 Sold 6 coffee mugs, 3 paper weights, 5 T shirts Sold 8 coffee mugs, 4 paper weights, 9 T shirts Bought stock (CM 20 x $8, PW 10 x $5) from Screen Chq Bought 24 cans coke from Bi-Lo Chq Sold 15 coffee mugs, 5 paper weights, 12 T shirts Bought 20 coffee mugs, 30 T shirts from Screen Chq Sold 12 coffee mugs, 4 paper weights, 14 T shirts. 652 Aug 1 Paid for advertising in student daily (23 days) to Chq Central Senior College 1 Paid for advertising in Newsletter to Parent s Chq Association for August 3 Bought 10 paper weights from Screen Chq Bought 24 cans of coke from Bi-Lo Chq Purchase of plastic bags for August, Bi-Lo Chq Sold 14 coffee mugs, 6 paper weights, 14 T shirts Paid for 4 weeks hire of trestle table to Central Senior Chq College 9 Bought 40 coffee mugs, 10 paper weights, 60 T shirts Chq from Screen 10 Bought 24 cans coke from Bi-Lo Chq

3 11 Sold 10 coffee mugs, 5 paper weights, 20 T shirts Sold 16 coffee mugs, 8 paper weights, 21 T shirts Bought 10 paper weights from Screen Chq Purchase of additional plastic bags for August, Bi-Lo Chq Bought 24 cans coke from Bi-Lo Chq Sold 15 coffee mugs, 7 paper weights, 16 T shirts Bought 24 cans coke from Bi-Lo Chq Bought 40 coffee mugs, 10 paper weights, 60 T shirts Chq from Screen Sept 1 Paid for advertising in student daily (22 days) to Chq Central Senior College 1 Paid for advertising in Newsletter to Parent s Chq Association for September 1 Paid for hire of trestle table for September 5 weeks Chq Sold 8 coffee mugs, 4 paper weights, 10 T shirts Sold 12 coffee mugs, 6 paper weights, 12 T shirts Bought 24 cans of coke from Bi-Lo Chq Sold 13 coffee mugs, 7 paper weights, 14 T shirts Bought plastic bags for September from Bi-Lo Chq Bought 20 coffee mugs, 10 paper weights from Screen Chq Sold 8 coffee mugs, 2 paper weights, 8 T shirts Bought 12 cans of coke from Bi-Lo Chq Sold 10 coffee mugs,1 paper weight, 11 T shirts Repayment of student capital Chq Payment of dividends $20 x 25 Chq Required 1. Establish the budget for July, August and September Record the transactions for July to September 3. Prepare the profit and loss statement for the three months, showing separate months, and the total for the business. 4. Compare the actual transactions against the budget for the period, showing the variances, and the total for the business.

4 GUIDE NOTES TO SET UP DATAFILE 1. Open QuickBooks, on menu bar, click on File, New 2. Use Welcome to enter details of name of business and start date. Click on Leave (don t enter any other details here) 3. On menu bar, click on Lists, Chart of Accounts. Use Account button (at the bottom of the screen), New, to open accounts required. Be careful of the TYPE of account Account name Bank of Victoria Sales Stock purchases Advertising Hire of trestle table Promotion Wrappings Type Bank Income (Edit the name of the Opening Bal. Equity account to Capital) TO SET UP BUDGET 1. On menu bar, click on Company, Planning & Budgeting, Set up budget 2. Select the year required ( ) 3. Enter the amounts in the months required (these can be entered in the first month and copied across, then edit any amounts as necessary) 4. To check the budget, on the menu bar, click on Reports, Budgets & Forecasts, Budget Overview. 5. Use the pull down list for Columns to select Months 6. Set the dates required (beginning and end of period) and click on Refresh TO ENTER TRANSACTIONS 1. On the menu bar, click on Lists, Chart of Accounts. 2. Double click on the Bank account 3. Enter the details of the transactions. Make sure the date is correct for each one. The cheque numbers will update automatically and will need to be overwritten if the transaction is a deposit. The details of the Payee will be added to a list as the exercise is completed (you must use Quick Add this appears as you try to access the next field). The next time that name is used it will automatically fill for you as you start to key in the name. The name can also be selected from the pull down list. Enter the amount into the Payment or Deposit column. Use the pull down list to select the account which is to be used for the transaction. Click on Record and the balance will be updated.

5 TO ACCESS THE REPORTS 1. On the menu bar, click on Reports, Company & Financial, Profit and Loss. 2. Set the dates for the required report (beginning and end of the period). Click on Refresh. 3. Use the pull down list for Column to select Month, click on Refresh 4. To compare the budget to the actual, on the menu bar, click on Reports, Budgets & Forecasts, Budget v Actual 5. Set the dates, click on Refresh. 6. Move left and right to see the months required and the total for the period.