LaTricia Jones has been buying toys from overseas, packaging them on her dining room table and selling only on her website. She has received rave reviews for the quality and price of the toys. She needs to move out of her home and into a larger facility to be able to fulfill all of her orders. and she needs to determine her costs and the number of toys she needs to sell before earning a profit.

After researching her costs, she has come to the following conclusions.

• The rental of a small facility will be $1,300 per month, insurance $250 per month, and other fixed costs are estimated at $1,000 per month. In this facility, she will be able to package and ship 400 toys per month at a variable cost for each toy of $12.50. She plans to sell them for $20 each.
• The rent for a larger facility will be $2,500 per month, insurance $500 per month, and other fixed costs are estimated at $1,500 per month. In this facility, she will be able to package and ship 800 toys per month at a variable cost for each toy of $11.00. She plans to also sell them for $20 each.

LaTricia’s current information for her first year in business is as follows:

Static Budget per month Actual per month (averaged)

Toys 80 units 100 units
Sales $1,600 $2,000
Variable costs 1,200 1,450
Rent 0 0
Insurance 0 0
Other fixed costs 400 450

She has not taken any money for herself, but she would like to get to the point where she can quit her current job and spend all of her time focusing on her new business. She needs about $3,000 a month before she can quit her job. She is happy that she was able to sell more toys than she anticipated, but she is very unhappy that her costs were higher than her budget. She wants to know what she is doing wrong, and if she can move her business out of her home. She wants her dining room table back!

MGMT 6170, Week 3
Assignment: General Merchandising Client Report

LaTricia Jones has been buying toys from overseas, packaging them on her dining room table and selling only on her website. She has received rave reviews for the quality and price of the toys. She needs to move out of her home and into a larger facility to be able to fulfill all of her orders. and she needs to determine her costs and the number of toys she needs to sell before earning a profit.

After researching her costs, she has come to the following conclusions.

• The rental of a small facility will be $1,300 per month, insurance $250 per month, and other fixed costs are estimated at $1,000 per month. In this facility, she will be able to package and ship 400 toys per month at a variable cost for each toy of $12.50. She plans to sell them for $20 each.
• The rent for a larger facility will be $2,500 per month, insurance $500 per month, and other fixed costs are estimated at $1,500 per month. In this facility, she will be able to package and ship 800 toys per month at a variable cost for each toy of $11.00. She plans to also sell them for $20 each.

LaTricia’s current information for her first year in business is as follows:

Static Budget per month Actual per month (averaged)

Toys 80 units 100 units
Sales $1,600 $2,000
Variable costs 1,200 1,450
Rent 0 0
Insurance 0 0
Other fixed costs 400 450

She has not taken any money for herself, but she would like to get to the point where she can quit her current job and spend all of her time focusing on her new business. She needs about $3,000 a month before she can quit her job. She is happy that she was able to sell more toys than she anticipated, but she is very unhappy that her costs were higher than her budget. She wants to know what she is doing wrong, and if she can move her business out of her home. She wants her dining room table back!