BUSINESS TEMPLATE WORKSHEETS

1. What is the name of the company? _______________________________

2. What industry / sector are you in? ________________________________

3. List three products (outputs) you will use in this activity that your factory will produce:

           (Output A) _________________________________ 

            (Output B) _________________________________  

            (Output C) _________________________________

    Determine a market price your company sells each unit of each final product for:

 (Output A) $___________, (Output B) $____________ (Output C) $_______________

4.  PRODUCTION LEVELS, PRICE AND TOTAL REVENUE:

  For each of the three products (outputs A-C), determine THREE separate production level quantities (Q) that the factory could produce at for a month of production.  Multiply those Q levels by the price you established in part 3 and calculate their potential total revenue stream at each of the output levels (Q).

HUMAN CAPITAL (LABOR FORCE):  Brainstorm as a group carefully as to the production process of making each product (Output A-C).  Envision the steps it takes to assemble each final product and the quantity and quality of workers it will take based on the three production levels (Q) you established in part 4 for each product.  Consider the following for each of the three products:

5. Will this product require skilled labor, unskilled labor or both? ________________

6.  How many skilled workers (specialized, include supervisor/foreman) are needed to produce at:     Q1 levels?  __________ Q2 levels?___________    Q3 levels?____________

7. How many unskilled (menial) workers are needed to produce at:

             Q1 levels?  __________ Q2 levels?___________    Q3 levels?____________

8. What is the hourly salary paid for each skilled laborer      $___________________

    What is the hourly salary paid for each unskilled laborer   $___________________

9.  Remember, Q production levels are the amount of product you aim to produce for the month – roughly 25 workdays.  There is a fixed amount of work hours in a month (ex. figure 8hr days as full time x 25 days  = 200 hrs per full time worker- no overtime is permitted).

 Now, determine total labor hours needed to reach each of the three production levels by multiplying the total hours worked for the month by each laborer X the number of laborers needed.

10. Based on the information above, calculate the total wages paid out for the month at each Q production level.  Do so by multiplying the monthly hours above X the worker salaries, keeping in mind how many laborers are paid at a skilled wage rate and how many are paid at an unskilled wage rate. (NOTE: This will be added below as part of your Variable Costs)

11. ITEMIZED VARIABLE COSTS – As a group, discuss and list the inputs (putting worker wages last) that are involved in producing outputs A-C and the estimated cost for each input.  To determine estimated costs, you need to research comparable inputs online for as close to accurate figures as possible. 

**12. TOTAL VARIABLE COSTS and AVERAGE VARIABLE COSTS:

  First, using the values calculated in the table above (#11 – right column), fill in the entire TOTAL VARIABLE COSTS it will take to produce each Output A-C at each Q level (Q1-Q3) by adding up all the Variable Costs for each input, including labor wages.

            Second, calculate the AVERAGE VARIABLE COST by taking the TVC you just calculated and dividing it by the production level Q.  Enter this value in the last column.

NOTE: THE FIGURES IN THIS CHART ABOVE ARE YOUR CONTROLLABLE EXPENSES.

13.  TOTAL COSTS:   (Fixed + Variable):

Now simply refer back to the ASSUMPTIONS section and retrieve the “fixed” costs associated with your production.  Add these total fixed costs values onto the Total Variable Cost values you just calculated in Chart #12 to derive your total cost to produce each Output (A-C) at each Q Level (Q1-Q3).

TOTAL COST FOR MONTH

14. AVERAGE TOTAL COSTS :

 Now find your AVERAGE TOTAL COSTS (AC) for each Output A-C by simply dividing the TC totals from the chart above divided by the Q production level.

15.  TOTAL PROFIT:

Based on your cost analysis, determine your total profit for each product at each production level Q1-Q3.  This is done by subtracting your total cost figures in #13 with your total revenue figures in #4. Note any losses simply as a negative profit value.

16.  PRE-PRESENTATION MEETING:

Digest all the numbers and as a group make some solid conclusions about your production levels, prices, profits, costs and revenues.  THIS IS A CRUCIAL STEP TO A SOLID PRESENTATION!  The numbers tell the story – consider discussing:

–        what is our most profitable product?

–         Are we taking losses? 

–        What production levels of each give us the most profitable combination?

–         What is the most costly product?  What variable is most costly?

–         What can we alter in the production to cut costs?

–         Can we manipulate price?

Develop an action plan of how you would make this factory more profitable and recalculate just the crucial numbers to show the differences.  Be sure to prepare to defend in your presentation just how your changes generate more profit.

17.  PRESENTING TO THE BOARDROOM

Create a presentation of using this data.  It is mandatory that you generate relevant economic models (ie. Bar graphs, pie charts, Profit maximization graphs) using the data.  A Profit graph is expected showing shaded region of profits / losses.  Remember, you presentation has two basic parts – showing the company’s current status using the original numbers you calculated, and then presenting how the company would change based on your recommendations to the production process.  Projected figures / graphs are needed. Remember, work as a team and divide and conquer.  Everyone must have an equal and active role during the presentation.  A presentation grading rubric will be used for grading.