Financial Analysis

Alternative project: Automated Vehicle

Description of cost and revenue
Cost Description
Research expenses R&D is to develop new product or discover and create new knowledge
about scientific and technological topics for the purpose of uncovering
and enabling development of valuable new products, processes and
services. The cost used in research is to determine the industry and
consumer market about the automated vehicle
Compliance cost All businesses would need to sort out some legal requirements before
opening up. The compliance needs include insurance, license and
permit fees. Insurance including public liability, income protection and
vehicles.
Rental In order to develop and manufacture the automated vehicle, our
company need a proper premise to operate. The most strategic location
is choosing for maximizing the profit and reducing cost such as nearer
to the suppliers.
Premise modification Architectural plan and basic premise modifications such as electrical,
lighting, painting, security system, ventilation system and plumbing
are needed. A special room for testing the obstacles avoidance
technology is also needed.
Equipment The machines to manufacture the automated vehicle are bought from
the suppliers. Some testing equipment for sensors are also needed to
perform troubleshooting. Furniture such as tables, chairs and cabinets
are also required in the office for the employees. Safety and health
items such as first aid kits, smoke alarms and fire extinguishers are also
needed in order to tackle emergency situation.
Advertising To promote a new product, our company need to have sufficient
advertising to market the business in order to attract customers. The
public needs to be informed of the products we offer. As a part of
business’ marketing needs, items like website, brochures, business
card and signage are needed. To get this started, our company will
require services of graphic designer and website developer, while
including other costs, such as domain and hosting fees for the website.
Employee expenses In order to run the business, our company need to hire people and they
must be paid salary and offered other benefits, such as Employees
Provident Fund (EPF), medical coverage, uniform and safety clothing.
Failure to compensate employees adequately can end in low morale
 and high turnover, which can be a bad publicity for our business, and
incurring additional training cost for new staff.
Technological Technology aids any business to function more effectively and sort out
expenses daily basic business functions. This category of expenses varies
according to the type of business and include hardware like computer,
printers, scanners, modems, Photostat machine as well as software for
developing the product, such as MATLAB and SolidWorks.
Components In order to build an automated vehicle, the main components including
the wheel system, the body of car, the electrical system and battery,
sensors, and engine.
Maintenance All the machines need to service and calibrate each month. The factory
also needs to perform maintenance in order to keep it in a good
condition.
Utilities Utilities is the service provided to keep the household going such as
water and electrical.

Revenue Description
Sales The revenue is getting from selling a robotic vacuum cleaner to the
customer.
Value for each categories of cost
Cost Type of cost Value (RM)
Research for marketing (per month) 15,000
Research expenses
R&D for new technology 965,000
License 15,000
Compliance cost
Insurance (per month) 1,500
Rental Rental for factory (per month) 150,000
Premise modification Office modification 200,000
Machinery 682,000
Furniture 10,000
Equipment
Vehicles (per month) 8,000
Safety and health items 3,000
Website (per month) 3,500
Advertising
Brochures (per month) 1,000
Salary for 300 employees (Average Rm3000 per
900,000
employee per month)
Employee expenses
EPF (13% per employee per month) 117,000
SOCSO (1.75% per employee per month) 15,750
Hardware 20,000
Technology expenses
Software (per month) 3,700
Wheel, engine, electrical system, battery,
Components 155,000
sensors, materials for body of car (per unit)
Maintenance Machinery and factory 40,000
Utilities Water and electricity bills (per month) 90,000

Revenue Type of revenue Value (RM)

Sales Purchase by customer (per unit) 220,000
One-off cost and monthly cost

One-off cost (Initial cost) Monthly cost (Fixed cost)

Research expenses (R&D for Rm965,000 Compliance cost (Insurance) Rm1,500
new product)
Compliance cost (License) Rm15,000 Rental Rm150,000
Premise Modification Rm300,000 Equipment (Vehicle) Rm15,000
Equipment (Machinery, Rm700,000 Advertising Rm8,500
furniture, safety and health
items)
Technology expenses Rm20,000 Employee expenses Rm 1,032,750
(Hardware)
Technology expenses Rm3,700
(Software)
Maintenance cost Rm70,000
Research expenses Rm15,000
(Research for marketing)
Utilities (Water and Rm90,000
electricity)
TOTAL Rm2,000,000 TOTAL Rm1,386,450
Cash Flow Diagram