Financial analysis for a new business - Delight Lollies

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Task One

In task one, we have been asked to identify 4 different costs that James and Lucy have to pay, these costs are; start up costs, running costs, fixed and variable costs.

Fixed Costs- Fixed costs do not change with production. No matter how much profit that you make you will still have to pay for things such as: rent, business rates, and interest on loan payments, insurance, salaries. Fixed costs always stay the same, even if you make no profit at all.

Variable Costs- Variable costs change with the number of goods and how much a business tends to make. The costs increase as the more profit you bring back to the business. Examples of Variable costs are: raw materials, refreshments for customers, and wages

Starts up costs- Start up costs are costs in which you only ever pay once, and that is usually at the start of the business. Examples of start up costs are premises, machinery, equipment, fixtures and fittings and market research to start up the business.

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Running Costs- Running costs are paid everyday to run the business, examples of these are wages, bills, raw materials and insurance.



Overall Total: £151.50

Overall Total: £399

Task Two

The following section I will be explaining the importance of costs, revenues and profits.

It is important to have low costs for a business because it helps achieve profit maximisation and also you can then keep up with the other businesses in the area. Also it ...

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**** A good structure and many good points are made here. There are some inaccuracies and it does all make it sound easy. More application to the case study is required. This is very general.