COST ESTIMATION

The financial plan is the final step in preparing a business plan that shows the short and long-
term financial requirement in order to start a new business or project.

It is the most crucial aspects and the most important part in the business plan, and it involves
determining the total project cost, choice of sources of financing and preparation of financial
projections in terms of pro forma statements, which includes income statement and balance
sheet. Some financial analysis are also including in order determining the viability of the
proposed business or project.

Expense Cost
Fried Ice Cream Machine: 1 unit = RM 1,000
2 units = RM 2,000

Shop Rental RM 4,000 deposit

RM 24,000 per year

Transportation RM 29,800
RM 6,000 deposit
RM 5960 per year

Advertisement : Banners, flyers, RM 2,000

advertisement in newspaper, etc
Other Expenditure : Freezer, furniture, RM 20,000
telephone line, internet, etc

Opening Cost

Expenditure Cost
Machine RM 2,000
Shop Rental Deposit RM 4,000
Advertisement On Opening RM 2,000
Transportation Deposit RM 6,000
Business License RM 60
Other Expenditure RM 20,000
Total RM 34,060
Initial Investment

Opening Cost + Early Production Cost (two Months)

RM 34,060 + RM 10,193 = RM 44,253

Working Capital (yearly)

Expenditure Cost
Production Stock RM 2.55 per unit
RM 61158.24 per year (24000 units)
Salary And Wages PM’s salary = RM 4,000
Other Managers Salary = RM 3,000 × 4
Employees Salary = RM 900 × 3
Bills and Utilities Monthly
Electric Bills = RM 150
Water Bills = RM 150
Internet Bills = RM 150
Telephone Bills = RM 100
Total = RM 6,600 per year
Delivery Gas = RM 80 per month
RM 1,200 per year
Commercialization : Banner, RM 1,500 per month
commercials, newspaper RM 18,000 per year
advertisement, flyers, etc.
Insurance RM 1,000 per year
Out flow

Expenditure Cost
Production Stock RM 61,158
Salary And Wages RM 224, 400
Transportation RM 4,760
Delivery RM 1,200
Bill and Utilities RM 6,600
Commercialization RM 18,000
Insurance RM 1,000
Shop Rental RM 24,000
Total RM 34,1118

In Flow

Product Sales = RM 480,000

Clean Profit annually (Product sales – Outflow)

RM 480,000 – RM 341118

= RM 138882