Assignment Objective You, individually or as a group, are assigned to create a m

Question

Assignment Objective You, individually or as a group, are assigned to create a mock company that sells at least one product or service. Creating a mock company from scratch forces you to think through both strategic and operational aspects of managerial accounting. THE COMPANY THAT WE CHOOSE IS GONNA BE "GOHST HUNTERS" (YOU CAN MAKE UIP ANYTHING YOU WANT) ITS GONNA BE FUNCTION REQUIREMENTS! Include sections on the following o Market size and analysis [10 points] Customer value [10 points] Description of costing system and reasoning for choosing it [15 points] Company profitability estimates for first five to tern years. [15 points]

Explanation / Answer

To set up a private limited company you need to register with Companies House. This is known as ‘incorporation’.

You’ll need:

You’ll also need:

Once you have these details, you can register your company

A key part of any business plan is the market analysis. This section needs to demonstrate both your expertise in your particular market and the attractiveness of the market from a financial standpoint.

This article first look at what we mean exactly by market analysis before looking at how to make a good one for your business plan.

What is a market analysis?

A market analysis is a quantitative and qualitative assessment of a market. It looks into the size of the market both in volume and in value, the various customer segments and buying patterns, the competition, and the economic environment in terms of barriers to entry and regulation.

How to do a market analysis?

The objectives of the market analysis section of a business plan are to show to investors that:

In order to do that I recommend the following plan:

The first step of the analysis consists in assessing the size of the market.

Delivering value to customers is important to managers, leaders, and entrepreneurs alike. To be willing to pay, a customer must derive value from a market offer. However, what is customer value? How does a supplier deliver customer value?

What is customer value?

There are various interpretations of what is meant by customer value. The term may mean low price, receiving what is desired, receiving quality for what is paid, or receiving something in return for what is given (Zeithaml, 1988). Woodruff’s (1997) definition of customer value is widely cited and encompasses most interpretations of customer value. Woodruff defines customer value as: “a customer perceived preference for and evaluation of those products attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations”.

The definition above suggests that there are two aspects to customer value: desired value and perceived value. Desired value refers to what customers desire in a product or service. Perceived value is the benefit that a customer believes he or she received from a product after it was purchased.

Customer value can be examined at different levels. At a low level, customer value can be viewed as the attributes of a product that a customer perceives to receive value from. At a higher level, customer value can be viewed as the emotional payoff and achievement of a goal or desire. When customers derive value from a product, they derive value from the attributes of the product as well as from the attribute performance and the consequence of achieving desired goals from the use of the product (Woodruff, 1997).

A costing system is designed to monitor the costs incurred by a business. The system is comprised of a set of forms, processes, controls, and reports that are designed to aggregate and report to management about revenues, costs, and profitability. The areas reported upon can be any part of a company, including:

The information issued by a costing system is used by management for a variety of purposes, including:

The reports of a costing system are intended for internal use, and so are not subject to the reporting requirements of any of the accounting frameworks, such as GAAP or IFRS. Instead, management can decide what types of information it prefers to see, which information to ignore, and how the results are to be formatted and distributed for its consumption. Typical reports created by a costing system include:

These reports may be accompanied by additional information assembled by the accounting department, which provide details regarding how certain costs were incurred and who authorized them.

There are two main types of costing systems. A business can accumulate information based on either one of these systems, or adopt a hybrid approach that mixes and matches systems to best meet its needs. The primary costing systems are:

Another costing system option is activity based costing (ABC). ABC was developed in response to concerns that overhead costs are rarely allocated in an appropriate manner, and involves a finer degree of differentiation in determining how overhead costs are assigned to different cost pools, and then how the costs in those pools are allocated to cost objects. An ABC system can be difficult to set up and operate, and so works best when designed for very specific cost allocation projects that have clearly defined boundaries.

Many entrepreneurs start their business at least in part because of pride of ownership and the satisfaction that comes from being their own boss. In addition, of course, you almost certainly also started your business to generate profits. This training guide will introduce you to several methods that will help you analyze your company's operations and compute the profitability of your business.

Among the tools to which you will be introduced are profitability ratios, break-even analysis, return on assets and return on investment.

Some of these concepts, and some of the vocabulary we will use to describe them, may be new to you. But we've tried to explain the terminology and concepts as they are introduced. Where appropriate, we've pointed you to additional sources of information.

efore you get started, you or your bookkeeper should have prepared an income (or profit and loss) statement for your business. The techniques to which we will be introducing you on the following pages are intended to make your income statement more understandable and meaningful for you.

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