Application Budget Exercise

Application Budget Exercise
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Application Budget Exercise
The Budget Exercise is based on 1000 units of the products of interest; liter-robot and paw perfect. However, there are two types of costs: one-time and recurring costs. The 1000 unit costs apply for the recurring products. The one-time costs related to the total business cycle include those associated with environmental sustainability evaluations and business permit acquisitions. As such, the litter robot and the paw perfect budget are almost similar, except for costs associated with prices and weights of the products.
Primary Costs
Business administration costs
The United States authorities require investors to acquire a wide range of documentation and certifications before beginning operations. According to Schooley (2020), a business license is mandatory before starting a company. The cost of a business license in Nevada is $ 500 annually.
Raw Material Costs
The raw material costs already include the associated tax since the companies assume suppliers have already incurred the costs. According to (Alibaba, 2021) materials used in the manufacture of liter robots are made of rubber, stainless steel, and plastic. A single robot litter weighs 17kg (Alibaba, 2021). Therefore, the manufacture of 1000 units requires 17,000kg of raw material. Considering that the basic material is steel, the present study assumes that the stainless steel, rubber, and the plastic ratio is 5:1:2. Therefore, the weight of steel, rubber, and plastic materials is 10,625 kg, 2,125 kg, and 4,250 kg, respectively. Considering that the average prices per kg of stainless steel, rubber, and plastics are $1, $1.7, and $0.5, the material costs for 1000 units are $10,625, $3,612.5, and $2,125, respectively. The total cost of litter robot raw material is $16,362.5. The weight of Paw Perfect is 0.68lbs (0.3084428 kg), indicating that its material cost is 0.3/17 that of a litter robot: $288.75 (Walmart, 2021).
Property Costs
The property charges cover manufacturing and warehousing costs. According to Warehouse1 (2021), the average size of warehouses is 25,000 square feet (Warehouse1, 2021). However, it is pertinent to separate the warehouse from the production site. As such, manufacture ring plants will occupy an average of 50,000 square feet. The average retail price of 1 square feet space is $18. Therefore, the cost of the property is $900,000 monthly or $225,000 weekly. The budget assumes that manufacturers will take a week to manufacture 1000 units.
Tax Costs
In the United States, there are two categories of taxes: federal and state business taxes. The federal tax rate is 25%. Therefore, when a single robot liter price is $130, the tax cut cost for 1000 units is $32,500. The Nevada tax rate is, averagely, 8.1%. Therefore, the state tax for 1000 units is $10,530. The total tax cost of litter robots is $43030. The price of paw perfect is $19.88 (Walmart, 2021), inferring that its tax burden is 16.88/130 of litter robots: $
Secondary Costs
Wages
The wages for considerations include both management and junior level workers. It is proper to reduce costs through a decreased number of workers. Therefore, one manager and four e...