KCA UNIVERSITY

FACULTY OF COMMERCE-ENTREPRENUERSHIP & SMALL BUSINESS MANAGEMENT

BUSINESS PLAN

NAME: JOSEFRIDA MUMBUA KAMETI ADMNO.: 10/00340

PRESENTED TO OKACH

FRIDA GARMENTS

P.O BOX 8365 – 00100

LOCATED AT KITENGELA

TABLE OF CONTENTS

1.0 BUSSINESS DESCRIPTION.......................................................................................6

1.1 Sponsors of the Business...............................................................................................6

1.2 Experience required.......................................................................................................6

2

1.3 Ownership strucure........................................................................................................7

1.4 The business..................................................................................................................8

1.5 Year of Establishment....................................................................................................8

1.6 Objective of the Business...............................................................................................9

1.7 Industry..........................................................................................................................9

1.8 Plans for future growth..................................................................................................9

1.9 Products/Services Offered...........................................................................................10

2.1 Customers....................................................................................................................10

2.2 Target Market...............................................................................................................11

2.3 Potential Competitors & Swot Analysis.......................................................................11

2.4 Pricing strategy ...........................................................................................................14

2.5 Products offered......................................................................................................14-17

2.6 Sales tactics.............................................................................................................17-18

2.7 Advertising...................................................................................................................18

3.1Organization Chart........................................................................................................18

3.2 Staff duties and Responsibilities..................................................................................19

3.2 Salary Structure............................................................................................................19

3.3 Supporting services......................................................................................................20

4.1 Machinery and Equipment...........................................................................................20

3

4.2 Picture of the premises.................................................................................................21

4.3 Government requirement.............................................................................................21

5.1 Start up capital.............................................................................................................22

5.2 Working capital for the first year.................................................................................22

5.3 Projected profit & Loss A/c for 3 years.......................................................................23

5.4 Projected Balance Shee for 3 yearrs...........................................................................24

5.5 Cashflow Statement for Year 1 ................................................................................................25

5.6 The organization Break-Even .................................................................................................26

CHAPTER ONE

1.1 THE EXECUTIVE SUMMARY

Through current statistics provided by Ministry of education and population forecast in

Kenya it shows that the population has a higher rate of increment thus also the schools

4

will also increase to meet the demand of the growing population. A total of 40,000

school will be established by vision 2030.This is because education is free and many

parents will be able to educate their children thus creating a market to sell our uniform.

Education is basic need and cannot be wished away. Having looked keenly at this

unravelling situation it therefore goes without saying that demand for education is on the

rise.

The other angle we considered is the need of the companies to identify its staff by buying

uniform for them. Many company’s staff put on uniform for security reasons.

Having critically analysed the above situation, I have felt an ardent urge to be part of this

growing sector of our economy. Starting a business to supply uniform is potential one in

our developing country. It also given that quality life is a question of first satisfying

physiological needs first (Food, Clothes, Shelter and basic education) and this is where

am coming from. I want to share in this market through the provision of the necessary

inputs (uniform) and I want to do this by opening a business that will make these

materials readily available.

CHAPTER TWO

1.0 BUSINESS DESCRIPTION.

1.1 SPONSORS OF THE BUSINESS

Name: Josefrida Mumbua Kameti.

5

Age: 29 years

Present occupation: Credit Advisor.

Educational level: Currently at KCA University taking Bachelor of commerce.

Technical qualification: No qualification.

Professional qualification: CPA(K) acquired at Vision Institute of Professionals in 2004.

Name: Benjamin K Nyamai.

Age: 33 years

Present occupation: Finance and Administration manager

Educational level: Bachelor of commerce.

Technical qualification: No qualification.

Professional qualification:B COM University of Nairobi, CPA(K) acquired at Vision

Institute of Professionals in 2000.

1.2 EXPERIENCE REQUIRED

The relevant experience of the proposed business is having experience in tailoring, sells

and marketing, customer care, and good communication skills.

The business will entail selling of school uniform to the neighboring school, whereby

tailoring and sells and marketing experience will be required. For the business to run

smoothly because I have no experience in tailoring I will contract a third party to make

the uniform. I have identified two tailors at Kitengela who will be making the uniform

and be paid on piece work. The selling and marketing will be done by one sales person

who will be visiting the schools with a sample of their uniform especially the secondary

schools which issue uniforms to their children.

1.3 OWNERSHIP STRUCTURE

In planning the business I need to consider the ownership structure of the business. The

business ownership structure will not only define who owns the business, but also will

determine who controls it, who assumes liability, how profits are divided and how the

business will be taxed.

The following are the common business ownership structures.

6

Sole Proprietorship

Partnership

Limited Parternship

Corporation

Limited Liability Company

cooperative

The business will be a sole proprietor owned and run by my family.

The reasons why I choose the sole proprietorship are:-

Setting up and administering the business is comparatively easy and inexpensive.

The sole proprietorship business operated under ones name is not registered with the

state.

The personal liability is not a big worry because of the kind of my business. For instance

if the sizes of the uniform is small or big they can be adjusted.

The business will fully be financed by myself.

I will raise this capital from sale of my shares at East Africa Cables and Eveready

limited.

1.4 BUSINESS

The will entail selling of uniform to schools and big offices. It will involve moving from

one school to another to look for business and also approaching big companies. Will also

sell the uniform to the parents at our premises.

1.5 YEAR OF ESTABLISMENT

7

I would like to start the business on 1st August 2010 because at that time will have

gathered all the requirement of the business.

The business will be located at Kitengela town along Namanga road. It is between several

schools and companies which I intent to supply them with the uniform. The location is

good enough because is accessible its along a tarmac road, there is security because it is

near a police post.

As the business is located along the Namanga road which is the road ending to Tanzania

where am intending to get my materials from. It will be easier to transport them.

Tanzania has quality and cheaper materials. I have identified a sole supplier who will be

supplying me with the material. Other items like socks, ties will get them locally.

The reason why I have chosen to venture in the uniform supply business is that Kitengela

is a developing town with many schools coming up both private and public. There are

also many companies including the EPZ and banks which in the near future I will

approach them after the business has stabilized to introduce it to them.

Also after my survey I found only two shops supplying uniform but only at small

quantities and one has to make an order for it to be made.

For my business I will stock uniform for all the surrounding schools plus their socks,

shoes and sweaters for different sizes.

The business will contribute a lot to the community. Many people have been traveling to

Nairobi to get uniform for their children. By setting the business at Kitengela I will save

them the time and money spend to go to Nairobi. As am intending to employ one sales

person I will have created employment.

1.6 THE OBJECTIVES AND GOALS OF THE BUSINESS

To maintain the quality of material in accordance with customer needs.

Effective utilization of infrastructure facilities including manpower.

To ensure continued customer satisfaction.

Ongoing care and concern for maintaining high level of staff satisfaction and

motivation.

8

1.7 INDUSTRY

Cash is the most important yet least productive asset that a small business owns. The

business must have enough cash to meet its obligations or it will be declared bankrupt,

creditors, employees, and lenders expect to be paid on time and cash is the required

medium of exchange. The majority of funds will be allocated to the supplier which will

be ksh 400,000.00. The supplier has agreed to offer the materials at credit term of a

period of 30 days.

I will employ only one sales person to assist in the shop and also in looking for sales from

the schools nearby Kitengela.

1.8 PLANS FOR FUTURE GROWTH

The tends and prospects of the industry. First I would like to increase my stock by double

and also start selling on wholesale. I will approach the shops stocking uniforms and give

them discounted prices so as to be able to supply them with my uniform. Also I will

approach all the companies near Kitengela so as to introduce my business to them. I will

visit the EPZ and the Kenya Meat Commission and ask for the tender of supplying them

with the dustcoats and boots. Also am intending to increase my employees to five. This

will enable me to move from one company to another looking for orders so happens to

them. Will also introduce incentives to the highest seller so as to encourage them in

selling hence improving in my outcome.

1.9 PRODUCT/SERVICE.

For me to fit in the competing environment I have to stock and supply high quality

uniform in accordance to customer satisfaction. Due to the opening of the East Africa

countries to trade together without any barrier i have decided to get my uniform material

from Tanzania. This is because material in Tanzania are of high quality and cheap. The

uniform will be made by two qualified tailors whereby they will only do it when required

and be paid on piece work basis. All the faulty products will be at their cost.

9

For me to maximize the profits and incur as little as possible cost I should utilize my

infrastructure. Also am intending to employ a sales and marketing person to assist in

familiarize the potentials customers on our products.

The customer is the king of the business and is always right. To ensure customer

satisfaction I need to work closely to them getting their complaints and solving them

immediately. It is important to attract and retain customers for your business to have a

going concern.

The sales person employed will be selling on commission if he sales goods worth kshs

100,000.00. Also to motivate him to visit as many organizations as possible I will buy for

him a motorcycle.

CHAPTER THREE.

2.1 CUSTOMERS

My potential customers will be schools both secondary and the primary. Kitengela is a

very fast growing town with many schools coming up both public and private. For the

first time to get into the market I will the schools head teachers to refer the parents of

their pupils to my shop. Most of these buyers will only buy a single item at a time.

2.2 TARGET MARKET

I will approach the boarding schools were by they provide school uniform to the pupils

to get the orders. After getting the market share in schools I will approach the other small

businesses in the area for me to supply them with my uniform.

2.3 COMPETITION

10

The three most competitors are Eastmatt Enterprises, Kitengela uniform suppliers and

Kitengela outfits limited. These three businesses sell school uniform and so we are

competing for the same market.

SWOT analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It

involves specifying the objective of the business venture or project and identifying the

internal and external factors that are favorable and unfavorable to achieve that objective

SWOT FOR FRIDA GARMENTS

STRENGTHS

My value proposition is that I will supply the best uniform in the market which is in line

with the customers expectation. The uniform will be of the best material imported from

Tanzania.

With the kind of capital I have to set up the business is capable of supporting it so as to

expand the business.

My business is located along the main road to Tanzania so any person on the road is able

to see us.

Also as my material is been imported it is of high quality and of unique texture.

I have to outsource the making of the uniform to the qualified tailors whereby I have

entered into an agreement that I will be paying them based on piece work. Also I will

employ one salesperson to assit me in looking for customers from nearby schools or big

companies. The sales person has experience in sales and also the knowledge of best

materials for the uniform.

I will offer the lowest price for the uniform because the materials will be cheap to import.

WEAKNESSES

I will face the problem of getting customers because this market is very much

competitive. Some customers are very loyal to some shops and changing them to buy my

uniform may not succeed.

11

Also will face the challenges to build a good reputation of the company.

Most of the cash will be held in the stock so will have very little cash flows.

I have to commit myself in the business for it to succeed also I should give my workers

morale and the best leadership for them to be comfortable.

OPPORTUNITIES

The business has the opportunity to develop and grow this is because of the ready market

from the growing population of Kitengela.

I will be able to succeed in the steep competition because of my unique material of the

uniform. Also as I have approached the best tailors whose cost is low I will offer the

lowest price.

The targeted market will never exhaust because schools are there to stay and children

have to go to school. Also many companies are coming up in Kitengela where by their

staff put on uniform.

THREATES

Competition from other firms which are supplying the same products.

Employees might decide to move to other places after gaining knowledge and experience

of sells and marketing from my company.

The economy of Kenya is becoming unstable and most of the things are becoming to

expensive to acquire. This may lead to people not buying uniforms frequently.

Due to the fast changing of technology people may start looking for quotations for the

uniform in the internet so as to get the cheapest

SWOT FOR OTHER BUSINESSES.

STRENGTHS

The businesses are located in the middle of the market whereby many people go there

after doing other businesses in the market.

There business are of big size because they established them long ago and are able to

stock what the customer expects from the past experience.

12

They will take the advantage of customers behavior of not switching from one buyer to

another.

WEAKNESSES

Most of the companies are not financially stable and this may make them not to compete

effectively in the market.

Lack of well kept records for the organizations to forecast and plan for the future.

Lack of enough manpower to be able to meet the customers set targets and deadlines to

pick their uniforms.

OPPORTUNITIES;

Due to improved technology many businesses are also changing to adapt the new

technology so as to compete effectively in the market.

The business have a lot of information and conducting research on customer expectation

and satisfaction so as to be able to stock what the customer will require.

There is an opportunity of the market developing due to the growth of population in

Kitengela.

THREATS

The market demand may change due to the change of economy. Customers may not buy

uniform frequently due to the high cost of living.

New competitors competing for the same market share. High competition leads to drop of

prices thus leading to the organization to reduce market share.

2.4 PRICING STRATEGY.

While our ceiling price will be dictated by the movement of demand, our floor will be

directed by the costs of the wares up to the moment they arrive at the out let. We will

therefore seek to peg our prices slightly below what the market prices ( for penetration

purposes) in order to be able to survive in case the business payers decide to counter our

actions in regard to pricing. Pricing our wares slightly above the floor (costs) would work

13

against since in case our competitors decision to counter our moves by lowering their

prices. It is therefore quite important to strategically price within the market rates.

The prices of the products will be fixed. This is to enable us to serve the customers fairly

and also easy for me to track sales.

2.5 PRODUCTS OFFERED AND THEIR SELLING PRICES

ITEM AGE

SELLING

PRICE ITEM COST

SELLING

PRICE

Full dress

Below 5

years 600.00 Socks with stripes

Below 5

years 20.00

5 -10 800.00 5 -10 30.00

10-18 1400.00 10-18 35.00

skirt

Below 5

years 400.00 stockings

Below 5

years 25.00

5 -10 450.00 5 -10 30.00

10-18 500.00 10-18 40.00

Blouse – short

sleeved

Below 5

years 150.00 Leg warmers

Below 5

years 50.00

5 -10 180.00 5 -10 65.00

10-18 200.00 10-18 80.00

short

Below 5

years 150.00 ties

Below 5

years 50.00

5 -10 200.00 5 -10 75.00

10-18 250.00 10-18 100.00

Shirt – short sleeved

Below 5

years 150.00 Neck tie

Below 5

years 30.00

5 -10 180.00 5 -10 50.00

10-18 200.00 10-18 70.00

14

White socks

Below 5

years 20.00 vests

Below 5

years 35.00

5 -10 25.00 5 -10 40.00

10-18 35.00 10-18 50.00

Red socks

Below 5

years 15.00 P.E Kits (set)

Below 5

years 150.00

5 -10 20.00 5 -10 160.00

10-18 30.00 10-18 200.00

Yellow socks

Below 5

years 10.00 bloomers

Below 5

years 100.00

5 -10 15.00 5 -10 150.00

10-18 20.00 10-18 200.00

Dark grey socks

Below 5

years 25.00 wrappers

Below 5

years 150.00

5 -10 30.00 5 -10 165.00

10-18 35.00 10-18 200.00

ITEM AGE

SELLING

PRICE ITEM COST

SELLING

PRICE

T shirts - white

Below 5

years 50.00 Trousers - grey

Below 5

years 500.00

5 -10 80.00 5 -10 600.00

10-18 90.00 10-18 700.00

- other colours

Below 5

years 50.00 Trousers - black

Below 5

years 400.00

15

5 -10 65.00 5 -10 650.00

10-18 80.00 10-18 800.00

Red sweaters

Below 5

years 450.00

Trousers – other

colours

Below 5

years 300.00

5 -10 500.00 5 -10 600.00

10-18 650.00 10-18 800.00

Green sweaters

Below 5

years 500.00

Blouse – long sleeved

- white

Below 5

years 200.00

5 -10 650.00 5 -10 300.00

10-18 700.00 10-18 350.00

Grey sweaters

Below 5

years 600.00

Blouse – long sleeved

- blue

Below 5

years 250.00

5 -10 650.00 5 -10 350.00

10-18 750.00 10-18 400.00

Sweaters of Other

colours

Below 5

years 400.00

Blouse – long sleeved

- checked

Below 5

years 250.00

5 -10 450.00 5 -10 400.00

10-18 500.00 10-18 450.00

Shirts long sleeved -

white

Below 5

years 300.00

Blouse – long sleeved

- other colours

Below 5

years 300.00

5 -10 350.00 5 -10 350.00

10-18 400.00 10-18 400.00

Shirts long sleeved -

blue

Below 5

years 200.00 Gloves

Below 5

years 25.00

5 -10 250.00 5 -10 50.00

10-18 300.00 10-18 65.00

Shirts long sleeved –

other colours

Below 5

years 350.00 Full neck tops

Below 5

years 150.00

5 -10 450.00 5 -10 200.00

16

10-18 550.00 10-18 300.00

Most of our sales will be on cash bases to our customers. After establishing the business

will approach schools to get orders from them. The orders from the school will be paid on

credit terms. The credit will be for 30 days.

The criteria to use to get who qualifies for credit is:-

The customer has been buying from us for more than 6 months.

The customer buys in bulky like schools or buying for resale.

Must have been paying in cash without delay.

No after sale services are offered.

2.6 SALES TACKTICS.

Most of the sales will be done directly to the final consumer. But when the business picks

will start distributing the uniform to schools and other retailers in wholesale basis. The

target market is whole of Kajiado District but start focusing on schools in Kitengela.

2.7 ADVERTISING

My business need a lot of advertising because is a new one in the market whereby there

other businesses like mine in the place which are well established.

To advertise it I will use the local vernacular radio stations of all the tribes. There charges

are better and most people listen to them. They charge fifteen shillings per word. I will

also advertise in the Daily Nation Newspaper in the classified section. They charge two

hundred shillings per the space they provide in the classified section. Also will put some

print out in the schools, market centre and along the main road giving information about

my business. The information will include the name of the business and the types of

uniform found in my store.

CHAPTER 4

17

3.1 ORGANIZATIONAL CHART

An organizational chart is a diagram that shows the structure of an organization and the

relationships and relative ranks of its parts and positions/jobs.

An organizational chart of a company usually shows the managers and sub-workers who

make up an organization. It also shows the relationships of directors, managing director

chief executive officer and various departments.

Frida Garments will be managed by a Director and full time Manager for the day to day

running,

The board which comprise the Director and Manager will meet regularly to deal with

issues beyond the jurisdiction of the manager. Such issues include approval of capital

expenditure beyond that allowed for the manager, authorization of recruitment or

dismissal staff, review of performance and any other issues that the board may deem

necessary.

The manager shall be responsible for the day to day running of the establishment. He will

oversee the smooth operation of the business and ensure that the set targets and objectives

are met. He will ensure that the business adheres to the laws of the government of Kenya,

and bylaws of the Local authority in our establishment

3.2 STAFF DUTIES , RESPONSIBILITIES AND COMPANSATION PACKAGE

18

DIRECTORDIRECTOR

MANAGER MANAGER

SALES PERSONSALES PERSON

Job Tilte Compensatio

n package

Duties

Director: Benjamin

K Nyamai

Qualification:

Bachelor of

Commerce

Age: 33 years

20,000.00 1. Overall Directorship of the business.

2. Making top level decisions

3. Formulating polices and objectives of the

business

4. Chairing board meetings

MANAGER:

Josefrida M Kameti

Qualification:

Bachelor of

Commerce

Age: 29 years

15000.00 1. Daily management of the business

2. Overall Supervisor

3. Making top level decisions

4. Any other as may be delegated by the

Director

SALES PERSON:

Qualification. Sales

and marketing Dip.

Age: 27 years

6,000.00 1. selling in the shop

2. marketing our products

3.3 SUPPORTING SERVICES WILL BE PROVIDED AS FOLLOWS;

1. Bankers: The Cooperative Bank.

2. Lawyers: The Business will appoint Mung’ata & Co. advocates to be business’

lawyers.

3. Financial Advisors: The Director has consulted Vipul Shah Consultants before on a

personal level and intends to continue consulting them on behalf of the business.

4. Our postal address will be 8365 -00100 GPO. This is an existing address for the

family and so will be used for the business.

19

5. Our designers will be Fabians designers. Have experience on designing fashions for

various functions so they will be designing the uniform samples to be taken to

schools.

CHAPTER 5

4.1 The machinery and equipment required by the business are as follows.

MACHINERY

AND EQUIPMENT

UTILIZATION WHERE TO

PURCHASE

COST

Sewing machine For doing minor repairs. For

example uniform not fully hemmed

Kirinyanga

Cycle Mart.

Ksh

30,000.00

ETR For production of receipts for the

government to track our sales for

quick determinant of VAT.

Luthuli

Electronics

Ksh

75,000.00

A down

payment of

Ksh

10,000.00

Calculator Assist in computation Luthuli

Electronics

Ksh 750.00

Telephone For communication with our

suppliers and customers

Luthuli

Electronics

Ksh

16,000.00

4.2 A SIMPLE PICTURE OF THE BUSINESS PREMISES

20

4.3 GOVERNMENT REGULATIONS INDICATE BOTH PERMITS AND

LICENSES AND COMPLIES REQUIRED.

The government requires the following documents to be displayed in the business.

Trade licenses,

Kajiado Municipal council.

VAT certificate

CHAPTER 6

5.1 START UP CAPITAL/PRE OPERATIONAL COST

Initial investment into the business is Kshs 500,000.00.

I will raise this capital from sale of my shares at East Africa Cables limited and

Eveready limited.

Preoperation costs will take Kshs.100,000.00 whereas Inventory will take the rest of

Kshs.400,000.00.

Put it simply the preoperation financial plan is as follows;

a) Machinery and Equipments - 56,000.00

b) Fixtures & Fittings - 20,000.00

c) Registration /license -14,000.00

d) Rent -10,000.00

d) Stock /Inventory - 400,000.00

500,000.00

5.2 WORKING CAPITAL FOR ATLEAST THE FIRST YEAR

21

Working capital = current assets – current liabilities.

Working capital as at 31/08/2011

Current assets

Stock/inventory 265,500.00

Debtors 25,700.00

Pre-paid rent 10,000.00

Cash 272,775.00

573,975.00

Less

Current liabilities

Tax payable ( 22,192.50 )

Working capital 551782.50

5.3 PROFORMA PROFIT AND LOSS ACCOUNT FOR YEAR 1,2,AND 3.

Proforma Profit & Loss A/c

Year 1-3 (Kshs)

Year 1 Year 2 Year 3

Sales 855,500.00 1,026,600.00 1,385,910.00

Opening/Stock 0.00 365,500.00 295,000.00

Purchases 685,000.00 345,600.00 552,350.00

22

Less:

Closing/stock (365,500.00) (295,000.00) (125,400.00)

Cost of sales 319,500.00 416,100.00 721,950.00

Gross profit 536,000.00 610,500.00 663,960.00

Less:

Salaries and

wages 227,500.00 276,000.00 282,000.00

Allowances to

director 25,000.00 20,000.00 35,000.00

Insurance 25,000.00 25,000.00 27,000.00

Marketing/

Advertising 7,500.00 8,000.00 12,500.00

Depreciation 0.00 0.00 0.00

Miscellaneous 7,500.00 6,500.00 6,790.00

Postage/Delivery 14,200.00 16,735.00 22,000.00

Stationery 15,625.00 16,250.00 17,500.00

Rent/Utilities 110,000.00 120,000.00 120,000.00

Telephone 15,000.00 14,250.00 16,750.00

Repair &

Maintenance 6,700.00 4,500.00 5,600.00

Licences 8,000.00 8,000.00 8,900.00

Total Expenses 462,025.00 515,235.00 554,040.00

Net profit 73,975.00 95,265.00 109,920.00

Other Income 0.00 0.00 0.00

Profit before Tax 73,975.00 95,265.00 109,920.00

Taxation (30%) (22,192.50) (28,579.50) (32,976.00)

Profit Atfer Tax 51,782.50 66,685.50 76,944.00

Less : Dividends (0.00) (0.00) (0.00)

Retained profits 51,782.50 66,685.50 76,944.00

Transfer to (51,782.50) (66,685.50) (76,944.00)

23

Reserves

0.00 0.00 0.00

5.4 Proforma

Balance Sheet

Year 1 Year 2 Year 3

CURRENT

ASSETS:

INVENTORY 365,500.00 295,000.00 125,400.00

RECEIVABLES 125,700.00 182,400.00 455,200.00

CASH & CASH

EQUIVALENTS 72,775.00 281,840.00 288,560.00

PREPAID

EXPENSES

(RENT) 10,000.00 10,000.00 10,000.00

TOTAL

CURRENT

ASSETS 573,975.00 669,240.00 779,160.00

FIXED ASSETS 0.00 0.00 0.00

TOTAL ASSETS 573,975.00 669,240.00 779,160.00

CURRENT

24

LIABILITIES

TAX PAYABLE 22,192.50 50,772.00 83,748.00

ACCRUED

EXPENSES 0.00 0.00 0.00

ACCOUNTS

PAYABLE 0.00 0.00 0.00

TOTAL

CURRENT

LIABILITIES 22,192.50 50,772.00 83,748.00

SHAREHOLDER

S EQUITY

Share Capital 500,000.00 500,000.00 500,000.00

Retained Earnings 51,782.50 118,468.00 195,412.00

TOTAL

SHAREHOLDER

S EQUITY 551,782.50 618,468.00 695,412.00

TOTAL

LIABILITIES

AND

SHAREHOLDER

S EQUITY 573,975.00 669,240.00 779,160.00

25

5.6 REAKEVEN POINT FOR THE BUSINESS

At break even total costs equal to total revenue. Let sales be X.

462,025= x - cost of sales.

X = 462,025 + 319,500.00.

X= 781,525.00

26