Questions

1. You are curious as to how much Rachel and Siya made in their business last year. You do not have all the data, but you know that most of their expenses relate to buying the T-shirts and having them monogrammed. You know they paid themselves R50,000 each and you know the rent, utilities, insurance, and benefits package for the business was about R20,000.

About how much do you think they made “before taxes” last year? If they must make their payment to the venture capital firm, and then pay 50 percent in taxes, what was their increase in cash last year?

2. What was your reasoning behind using the aggregate demand forecast when determining the size of your order rather than the individual varsity forecasts? Should you rethink this or is there a sound basis for doing it this way?

3. How many T-shirts should you order this year? Break down your order by individual varsity. Document your calculations in your spreadsheet. Calculate this based on the aggregate forecast and also the forecast by individual varsity.

4. What do you think they could make this year? They are paying you R30,000 and you expect your benefits package addition would be about R10,000 per year. Assume that they order based on the aggregate forecast.

5. How should the business be developed in the future? Be specific and consider changes related to your supplier, the monogramming subcontractor, target customers, and products

Answer

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