Entrepreneurship Module 6: Manpower and Materials

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Questions and Answers

What is the primary consideration for an entrepreneur when selecting manpower?

Mode of production

Educational qualifications and experience of workers (correct)

Type of equipment to be used

Cost of labor

What is the primary characteristic of materials in production?

They are not a factor of production

They form part of the finished product (correct)

They are only required for service delivery

They are unnecessary for production

What is a key factor to consider when selecting manufacturing equipment?

The cost of the equipment (correct)

The color of the equipment

The size of the equipment

The type of material to be used

What is the term for the process of transforming raw materials into finished products?

Method Signup and view all the answers

What is dependent on the product to be produced and mode of production?

Selection of method Signup and view all the answers

What is an entity that offers goods and services to another business?

Product Description Signup and view all the answers

What is the main goal of value chain analysis?

To make or support a competitive benefit Signup and view all the answers

What is a supplier in the context of a business?

A business partner of the business Signup and view all the answers

What is the purpose of a business model?

To describe how an organization creates, delivers, and captures value Signup and view all the answers

What is a supply chain?

A structure of organizations, people, activities, data, and resources involved in moving a product or service Signup and view all the answers

What is the purpose of a business plan?

To explain what a product is and why it’s worth buying Signup and view all the answers

What is drop shipping in the context of suppliers?

When a supplier ships goods directly to the customers of the buyer Signup and view all the answers

What is the primary factor that determines revenue in a business?

Sales exceeding the cost of production Signup and view all the answers

What is the term used to record revenues earned from rendering services?

Service Income Signup and view all the answers

What is the formula to calculate the Selling Price of a product?

Cost + Mark Up Signup and view all the answers

What is the term used to refer to the amount of merchandise or goods sold by a business in a given period of time?

Cost of Goods Sold Signup and view all the answers

What is the purpose of knowing the number of products sold daily by competitors?

To benchmark the business's sales performance Signup and view all the answers

What is the result of multiplying the projected daily revenue by 365 days?

Projected yearly revenue Signup and view all the answers

What is the result of adding the beginning inventory to the Net Amount of Purchases?

Cost of goods available for sale Signup and view all the answers

What does 'Merchandise Inventory, beginning' refer to?

Goods and merchandise at the beginning of the operation or accounting period Signup and view all the answers

What is the purpose of calculating the gross profit margin?

To determine the profit that the business realizes from the sale of the product Signup and view all the answers

What is included in the 'Cost' of a product?

The total outlay required in producing the product Signup and view all the answers

What is 'Freight-in'?

The amount paid to transport goods from the supplier to the buyer Signup and view all the answers

What is the purpose of calculating the Cost of goods available for sale?

To determine the amount of goods available for sale during the period Signup and view all the answers

What is the operating profit margin a measure of?

The percentage of profit available after deducting cost of sales and operating expenses Signup and view all the answers

What is the correct formula for the quick ratio?

(Current assets – Inventories) / Current liabilities Signup and view all the answers

What is the net profit margin?

The third level of revenue in the income statement Signup and view all the answers

What is the relationship between the operating profit margin and the business?

A higher operating profit margin is favorable to the business Signup and view all the answers

What is the purpose of the operating profit margin?

To measure the percentage of profit available after deducting cost of sales and operating expenses Signup and view all the answers

What is the relationship between inventories and the quick ratio?

Inventories are excluded from the calculation of the quick ratio Signup and view all the answers

Study Notes

Module 6: Production Factors

Manpower refers to the human labor force involved in manufacturing products, measured as the most critical and primary factor of production.
Key manpower criteria include educational qualifications, experience, employment status, number of workers required, skills, and expertise.
Material includes raw materials necessary for production, with considerations such as cost, quality, availability, supplier credibility, and waste.
Machine refers to manufacturing equipment used in production, with factors to consider being product type, production system, equipment cost, capacity, spare parts availability, efficiency, and required skills.
Method encompasses the process of transforming raw materials into finished products, dependent on product type, production mode, equipment, and required skills.

Value Chain and Supply Chain

Value chain refers to the activities that add value to an item, aiming to create a competitive advantage.
Supply chain involves organizations, people, activities, data, and resources in moving a product or service from supplier to customer.
Business model describes how an organization creates, delivers, and captures value in various contexts.

Module 7: Revenue and Forecasting

Revenue results when sales exceed production costs.
Factors affecting revenue forecasting include economic condition, competitors, community changes, and internal business aspects.
Plant capacity, raw material availability, labor, and salespersons are crucial in revenue forecasting.

Pricing and Revenue Calculation

Mark Up Price = (Cost x desired mark up percentage)
Selling Price = Cost + Mark Up
Projected Yearly Revenue = Projected daily revenue x 365 days
Projected Monthly Revenue = Projected daily revenue x 30 days

Cost of Goods Sold and Merchandise Inventory

Cost of Goods Sold (COGS) refers to the amount of merchandise sold in a given period.
COGS is computed by adding beginning inventory to net purchases, then subtracting ending merchandise inventory.
Freight-in refers to the cost of transporting goods from supplier to buyer.

Module 8: Gross Profit and Profit Margin

Gross Profit = Net Sales - Cost of Sales
Gross Profit Margin = (Gross Profit / Net Sales) x 100
Operating Profit Margin = Gross Profit - Operating Expenses
Net Profit Margin = Operating Profit - Income Tax and Interest Expense

Liquidity Ratios

Current Ratio = Current Assets / Current Liabilities
Quick Ratio = (Current Assets - Inventories) / Current Liabilities

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Description

Learn about the importance of manpower and materials in production. Understand how to evaluate manpower criteria such as educational qualifications and skills, and how materials form part of the finished product.