Companies Market Popularity

1. Bosch 70%

2. Philips 68%

3. Tefal 67%

4. Russell Hobbs 64%

5. Black and Decker 61%

Appendix:1

(Yougov,2020)

Global Competitors

Companies Market Share

1.Whirlpool 4.6%

2.LG 6%

3.Samsung 5.3%

4.Haier 10.5%
(Statista,2017)
APPENDIX

Non relevant cost

PARTICULARS Non-relevant cost Note

Designing and Testing 4,500,000 Past Cost
Salary to business consultants 100,000 Past Cost
Salary of Managers 60,000*3=180,000 Future Committed Cost

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 Appendix :1
Labor cost

Total Time To Manufacture/ Hours 4

Labor Cost/ Hours 20

It is expected to increase by 2% years on years after year 1

Years 1 Years 2 Years 3 Years 4 Years 5

Labor cost per  =83.23*2%
=20*4 =80*2%+80 =81.6*2%+81.6 =84.90*2%+84.90
unit +83.23
=80 =81.6 =83.23 =86.60
   =84.90

Appendix:2
Raw Material
Initially the cost of raw materials is pound 110. This is estimated to increases 5 pound
in years3. No further increased after Year 3

Years Years 2 Years 3 Years 4 Years 5

=110 =110+5 =115*5%+115 =83.2*2%+83.2 =84.9*2%+84.9
Raw Material Per Unit =110 =115 =120.75 =120.75 =120.75

Appendix:3
Packaging Cost
The packaging cost for years1 and 2 is Pound 5 and it is decreased by 10% for the
remaining life of the project.

Years 1 Years 2 Years 3 Years 4 Years 5

=5 =5 =5-10%*5 =5-10%*5 =5-10%*5
Packaging Cost =5 =5 =4.5 =4.5 =4.5

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 Appendix: 1
Variable Production Overhead
The Production overhead generated by this project alone is a semi-variable cost and
information provided by the management account; when 10,000 units are produced the
costs is budgeted to be £370,000, however when 12,000 units are produced the
production budgeted overhead are budgeted to increase to £414,000. Production
overhead are forecast to increase by 2% years on year after year 1.
Variable Cost per Unit= High Cost - Low Cost/High Quantity - Low Quantity
= 414,000 – 370,000/12000-10000
= 44,000/2,000
=22 Per Unit
Variable Cost per unit
Years 1 Years 2 Years 3 Years 4 Years 5
22 =22*2%+22 =22.44*2%+22.44 =22.89*2%+22.89 =23.35*2%+23.35
  =22.44 =22.89 =23.35 =23.81

Appendix:2
Distribution Cost

The new product the distribution costs are expected to increase by £550 per annum for
every 200 units sold.

Years 1 Years 2 Years 3 Years 4 Years 5

=12,750/200*(550 =13,650/200*(550 =12,450/200*(550 =102,50/200*(550
=10,750/200*(550
) ) ) )
) =53.75 * (550)
= 63.75 *(550) =68.25 * (550) =62.25 * (550) = 51.25 *(550)
= 54 *550
= 64*550 =69*550 =63*550 =52 *550
=29,700
=35,200 =37,950 =34,650 =28,600

Quantity value are not measured in decimal so we roundup to the nearest value.

3|Page
 Appendix :3
Staff Salary
Five members of staff will need to be recruited; they will each attract a salary of
£30,000 per annum.

Number of staff= 5
Salary per staff= £300,000 per annum
Salary per year= £300,000*5
=£150,000

Appendix: 4
Fixed Production Over Head
Semi- Variable Cost = Variable Cost per Units* Quantity + Total Fixed Cost
414,000 = 22*12,000 + Total Fixed Cost
414,000 = 264,000 + Total Fixed Cost
150,000 = Total Fixed Cost

Fixed Production Over Head

 Years 1 Years 2 Years 3 Years 4 Years 5
=150,00
150,000*2%+150000 153,000*2%+1530000 156,060*2%+156,060 159,181.2*2%+159,181.2
0
=153,000 =156,060 =59,181.2 =162,364.82
 

Appendix: 5
Cash Flow of year 5
Since the asset will have a salvage value of 250,000 at the end of year 5 and also the
working capital is of 50000 is to be fully recovered hence the salvage value and working
capital is added at the end of the project's life.

4|Page
Appendix: 6
PAYBACK PERIOD

Payback Period
Years Cash Flow (£) Cumulative Cash Flow (£)
(120,000
0 ) (1,200,000)

1 418,440 (781,560)
476,723 (304,836.80
2 .20 )
370,978 (66,142.03
3 .83 )
260,853 326,995.4
4 .38 1
472,831 799,827.3
5 .88 0

Pay Back Period (PBP)= 2 years + {(304,836.8/370,978.83) * 12}

= 2 years + 9.87 months
= 2 years and 9.87 months
= 2 years 10 months

Appendix: 7
CALCULATION of Annual Rate Return (ARR)
Profit before Depreciation = Net Cash Flow after Tax
= 418,440+476,723.2+370,978.83+260,853.38+172,831.89
= 1,699,827.3
Annual Depreciation= Original Cost – Salvage Value
= 1150,000-250,000
= 90,000

5|Page
Profit after Depreciation= Cash flow after tax- Annual Depreciation
= 1,699,827.3 – 900,000
= 799,827.30
Average Profits = Profit after Depreciation/ Number of Years
= 799,827.30/5
= 159,965.46
Average Investment = (Investment+ Scrap Value)/2+ Working Capital
= (1,150,000 +250,000)/2 + 500,000
= 70,000+50,000
= 750,000
Annual Rate of Return (ARR)=Average profit/Average Investment*100%
= 159,965.46/750,000 *100%
= 0.2133* 100%
= 21.33%
Appendix: 8
NET PRESNT VALUE (NPV)
Net Present Value
 
(NPV)
Discount Factors Discounted NCF at 12%
Years Cash Flow (£)
12% (£)
(1,200,000) 1
0 (1,200,000)
418,440
1 0.89 373,666.92
476,723.20
2 0.80 379,948.39
370,978.83
3 0.71 264,136.93
260,853.38
4 0.64 165,902.75

472,831.88
5 0.57 268,095.68

Net Present Value (NPV) (£)

251,751

6|Page
 Appendix:9
Internal Rate of Return (IRR)

Discount Discounted NCF at Discount Discounted NCF

Years Cash Flow (£)
Factors 12% 12% (£) Factors 21% at 21 (£)

0 (1,200,000) 1.00 (1,200,000) 1 (1,200,000)

1 418,440 0.89 373,666.92 0.83 345,631.44

2 476,723.20 0.80 379,948.39 0.68 325,601.95

3 370,978.83 0.71 264,136.93 0.56 209,232.06

4 260,853.38 0.64 165,902.75 0.47 121,818.53

5 472,831.88 0.57 268,095.68 0.39 121,818.53

       
251,751 (15,202.92)
Internal Rate of Return =12% + [{251,751/251,751-(-15,202.92)} *(21%-12%)
=12% + [{251,751/266,953.92} * 9%]
=12% + [0.94*9%]
= 12% + 8.45%
= 20.49%
Formula Used:
IRR= P + [{p/(p-n)} * (P-N)]
Where, P = Rate giving the positive NPV
N= Rate giving the negative NPV
p = Positive NPV Value
n = Negative NPV value

7|Page
 Appendix: 10
Manufacturing per unit cost

Manufacturing per unit cost

Year
  Years 1 Years 2 Years 3 Years 4 Years 5  
0
Variable Manufacturing Cost 224. 231. 233. 235.
  217  
per unit 04 37 49 66
11. 10. 12. 13. 14.
Fixed Manufacturing per units    
76 99 05 95 63
228. 235. 243. 247. 250.
Manufacturing cost per units    
76 03 42 45 29

Here,
Variable Manufacturing Cost per unit = Direct material/ unit+ Direct Labor/ unit +
Packaging/unit+ Variable production Overhead/unit
Fixed Manufacturing Cost/unit= Total Fixed Production Overhead/ Quantity
So, Total Manufacturing Cost per unit = Variable Manufacturing Cost/unit+ Fixed
Manufacturing Cost/unit

Average (228.76+235.03+243.42+247.45+250.29)/5
Manufacturing
cost per unit =241.54/unit
Average Price 2/3*241.54
units =160.02/unit

8|Page
 Minute of the Meeting

Meeting Number 1
Date 18 February, 2020 Time 12:00 PM
Location The British College (Class: A2)
Group Member attending (Present): All the Member were present
1. Aarati Gurung
2. Avash Shakya
3. Florida Maharjan
4. Sujan Shahi
5. Shalin Pokharel
Discussions:
 In the first meeting, we thoroughly read the coursework scenario (Kouzina Ltd) and the
subsequent requirements.
 Next, we discussed about investment appraisal techniques which will help to analyze the
case scenario (Net Cash Flow forecast, Investment Appraisal Methods: Payback Period, Net
Present Value, Internal Rate of Return and Annual Rate of Return.
 Finally, we agreed on tabulating the Net Cash Flow (NCF) and its calculation.

Date of Next 21 Time 1:00 PM

Meeting February,2020
Locatio The British College (Library)
n

9|Page
Meeting Number 2
Date 21 February, 2020 Time 1:00 PM
Location The British College (Library)
Group Member attending (Present): All the Member were present
1. Aarati Gurung
2. Avash Shakya
3. Florida Maharjan
4. Sujan Shahi
5. Shalin Pokharel
Meeting
 After tabulating and the calculations of the Net Cash Flow (NCF) forecast, we got it approved
by our module leader. Thereafter, we started the calculations of the investment appraisal
method such as Payback Period (PBP), Annual Rate of Return (ARR), Net Present Value
(NPV) and Internal Rate of Return (IRR) for Kouzina Ltd.
 For the next Meeting, we planned to discuss on the overview of the investment appraisal
techniques for which we agreed to research for the industry examples.
Date of Next 24 Time 10:00
Meeting February,2020 AM
Locatio Red Mud Cafe (Thapathali)
n

Meeting Number 3
Date 24 February, 2020 Time 10:00 AM
Location Red Mud Cafe (Thapathali)
Group Member attending (Present): All the Member were present
1. Aarati Gurung
2. Avash Shakya
3. Florida Maharjan

10 | P a g e
 4. Sujan Shahi
5. Shalin Pokharel
Meeting
 Firstly, we discussed each of our viewpoint on the investment appraisal techniques with
industry examples. Then, we wrote the overview for the business report.
 Then, we decided on extracting information on both financial and non-financial measure as
well as ethical and sustainability evaluation for the project regarding both make and buy
proposal
 For the next meeting, we planned to discuss our the measures and provide with the
recommendation for the project.
Date of Next 1 March,2020 Time 12:00
Meeting PM
Location The British College (Library)

Meeting Number 4
Date 1 March, 2020 Time 12:00 PM
Location The British College (Library)
Group Member attending (Present): All the Member were present
1. Aarati Gurung
2. Avash Shakya
3. Florida Maharjan
4. Sujan Shahi
5. Shalin Pokharel
Meeting
 Firstly, we discussed each of our viewpoint on financial and non-financial on both make and

11 | P a g e
 buy decision and then we collaborated and wrote proposal for the business report where we
recommend the Kouzina Ltd (KL) might be benefit with a make decision.
 And the next one we discussed on the three pillar of sustainability that is Social, Economic,
and Environmental.
 In the last meeting we talked about the approval of the project and as well as the
Conclusions and Recommendations for the Kouzina Ltd (KL). Moreover, we also cross-
checked each other’s draft.

Date of Next 10 March,2020 Time 1:00 PM

Meeting
Location The British College (Class: A2)

Meeting Number 5 (Final Meeting)

Date 11 March, 2020 Time 12:00 PM
Location The British College (Class: A2)
Group Member attending (Present): All the Member were present
1. Aarati Gurung
2. Avash Shakya
3. Florida Maharjan
4. Sujan Shahi
5. Shalin Pokharel
Meeting

12 | P a g e
 We approved the project on the basis of
 We completed the Recommendation and Conclusion and moved on to completing the
business report.
 We compiled our work and checked the structure and referenced. We addressed the
executive summary point and prepared a final draft.

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