Assignment -

Assignment consists of three, 3-5 page responses to Lessons 7, 8, and 9. You are expected to write each response upon completion of that lesson's readings and other course materials. You will also prepare draft Pro-forma Financial Statements for your business venture.

Instructions - The assignments are designed for you to reflect critically on the readings and other course materials. In doing so, you are expected to use these assignments to explore the course content and develop your own ideas and responses to the different topics and issues in new venture creation. Each lesson has an accompanying question that asks you to synthesize and critically analyze the readings and other course materials. The assignments also include the outcome of the activities you undertook after completing some lessons such as brainstorming, industry analysis, or market research, etc.

Assignment is comprised of your responses to the following questions:

Lesson 7:

1. What are the different factors you consider regarding location when you plan to open service (e.g., accounting firm) and product (e.g., retail store) oriented new ventures?

2. Discuss why entrepreneurs should pay special importance to capacity planning. Solve the problems on capacity planning given in Activity 7.3 and attach the solutions here. In Lesson 7.3 you are presented with the following information and you have to solve the two problems pertaining to capacity planning:

a. You are planning to start a small manufacturing business. Two types of technologies can be used in the production process, with each process having different fixed costs and variable costs associated with it. Although both processes result in products of acceptable quality, the quality of products from the first process is higher and can be can be sold at a premium. For the first process, fixed costs are $80,000 per year and the variable cost is $80 per unit. The firm currently sells 400 units of the product at $400 per unit. The second process has higher fixed costs of $120,000 per year, but the variable costs are much lower, at $40 per unit. While the sale price cannot be more than $200, it allows you to sell 800 units. Based on the information available, calculate the profit earning potential of these processes and make the capacity (process) decision. Which process would you select?

b. You are planning to start a bicycle shop. The fixed costs are $18,000 per year. The variable costs for assembling each bicycle are $80. The sales price of each unit is $230. What is the break-even point for this operation? If the shop sells 300 bicycles per year, what is the profit (or loss)?

Lesson 8:

1. Solve the Mini-Case: Phionica provided at the end of Lesson 8 and develop pro forma budgets. The activity is located on pp. 447-449 in your textbook, Phionia's Finicky Feline Gourmet Cat Dinners. Create the sales budget, production budget, etc as outlined in the Case Discussion Question 1 as well as answer Question 2.

2. Estimate the start-up costs for your proposed new venture. (You can use the suggested format given in Appendix A below. Or do an Internet search for "Pro-forma Financial Statements" to find a template to use. Microsoft has good templates that are accessible in Excel 2007 or later.

3. Prepare all pro-forma budgets for your proposed new venture.

4. Prepare the pro-forma balance sheet and income statement for your new venture.

Lesson 9:

1. What are the advantages and disadvantages of different sources available for financing new ventures?

2. What kind of financing (or combination of financing) do you propose for your new venture, and why?

Attachment:- Assignment File.rar