In this activity, you will be creating budgets for a single product for each of the months in an

upcoming quarter. Select a product that you could purchase in large quantities $($at a Sam's

Club, Walmart or the producer$/$manufacturer$)$ and repackage into smaller quantities to offer for sale at a Pop$-$Up Shop, Nightmarket$/$Market Day, a sporting event, a school event, $$flea market$/$yard sale or other similar venue.

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Investigate the price and quantity at which this product is available at the warehouse. Choose a selling price for the smaller $($repackaged$)$ package. Make reasonable assumptions about how many of the smaller units you can sell in each of the next four months $($you will need the fourth month's sales in units for the operating budgets$).$

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Discussion Questions

$1.$ Describe your product. What is your cost of this product? What size $($quantity$)$ will you

purchase? At what price will you sell your repackaged product? Make projections of your

sales in units in each of the upcoming three months.

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$2.$ Estimate how many hours you will spend in each of the upcoming three months doing the

purchasing, repackaging, and selling. Select a reasonable wage rate for yourself. What

will your total labour costs be in each of the upcoming three months?

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$3.$ Prepare a sales budget for each of the upcoming three months $.$

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$4.$ Prepare the direct material budgets for the upcoming three months, assuming that you

need to keep $10\%$ of the direct materials needed for next month's sales on hand at the end

of each month $($this requirement is why you needed to estimate unit sales for four months$).$

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$5.$ Prepare a direct labour budget $($for your labour$)$ for each of the upcoming three months $.$

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$6.$ Think about any other expenses you are likely to have $($i$.$e$.,$ booth rental at a flea market

or a vendor license$).$ Prepare the operating expenses budget for each of the upcoming

three months.

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$7.$ Prepare a budgeted income statement that reflects the budgets you prepared, including

the sales budget, direct materials budget, direct labour budget, and the operating expenses

budget. This budgeted income statement should include one column for each of the three

months in the quarter, and it should also include a total column that represents the totals of

the three months $.$ What is your projected profit by month and for the quarter?