Marketing Expenses

Marketing expenses is the amount of money required to promote The Meals food catering
service to the public. As the first step of introduction of The Meals food catering service to
the public, we will be setting up a website under blogspot and it will be hosted by the
receptionist. Apart from that, we will also be advertising our service thru printed materials and
mass media such as Facebook, Instagram and WeChat.
Establishment Cost:

Advertisements

Description (s)

Mass
media

Expense (RM)

Newspapers (Full colour

& Sin Chew and Guang
RM 166 x 14 = RM 2324.00
Ming Daily News for
Publicity using
West and East Malaysia
newspapers and
for the first 2 weeks)
company
Business website (hosted
website
by receptionist)
Social media (Facebook,
WeChat and Instagram)
Total Establishment Cost
RM 2324.00

Running Cost
Description (s)
Flyers (A3 x 2000
pieces)

Advertisements

Printed
materials

Printing of
materials for
advertisements
(2009)

bag
Label
sticker

1,300.00

Posters (A3 x 100 pieces)

250.00

Brochures

500.00

Business cards

120.00

Laminated menu (A4

size x 50 pieces)
Banner

Annual total costs for printed materials

Paper

Expenses per annum (RM)

Advertising the service by providing paper

bag with companys logo, phone number
and address
Sticker on top of the wrapping with
companys logo, phone number and sticker
Annual total running expenses

250.00
1,790.00
4,210.00
8,000.00

1,000.00
RM 13,210.00

Production Expenses
The production expenses for our business include packaging, administrative utilities, cooking
utilities, cooking utilities maintenance, water, electricity and cooking fuel gas.

Table 1: Establishment Cost

No
Description
1 Cooking Utilities
2 Catering Vehicle (Motorcycle)
Total

Quantity
/
1

Unit Price (RM)

Lump Sum
3,000

Quantity

Monthly (RM)

/
/
/
1
/

100
400
Lump Sum
Lump Sum
Lump Sum

Total (RM)
2,500
3,000
5,500

Table 2: Running Cost

No
1
2
3
4
5

Description
Water
Electricity
Cooking Utilities Maintenances
Catering Vehicle Maintenances
Gas and Fuel
Total

Total (RM),
Annual
1,200
4,800
2,000
1,000
5,000
14,000

Purchasing Cost:
In the purchasing cost, the materials needed are such as meat & fish, plastic and wooden
utensils that will be given to customers to consume our products and lastly the dry materials
such as eggs, vegetables and much more to produce our products. The annual expense for all
these are assumed for the first year of conduct of business and rise of expenses annually is
expected. We take the operating hours as 6 days per week, 4 weeks per month and 12 months
per year
Running Cost:
No
Description
1
Meat & Fish
2
Dry Materials(dry
goods used in
cooking)
3
Plastic and
Wooden Utensils
Total

Daily (RM)
200

Monthly (RM)
5,200

Annually (RM)
62,400

4,000

48,000

500

13, 000

200

9,700

123,400

Personnel Expenses
The personnel expenses include salary for each staff of our company. However, the two owners
salaries are not included in our expenses.

No.

Position

Quantity

Salary per
person per
month (RM)

Total salary per

month (RM)

2,000.00
1,200.00
1,000.00

2,000.00
2,400.00
1,000.00

1,000.00
1,500.00
10/hour
Gross salaries

1,000.00
1,500.00
1,200.00
9,100.00

EPF (11%)

1,001.00

Total net
salaries

10,101.00

Production
1
2
3

Head chef
Chef
Production assistant

1
2
1
Reception & Delivery

4
5
6

Receptionist
Delivery man (full time)
Delivery man (part time)

1
1
1

It is assumed that personnel expenses are subjected to an annual growth rate of 5%.

No

Position

1
2

Head chef
Chef
Production
assistant
Receptionist
Delivery man
(full time)
Deliver man
(part time)

3
4
5
6

Total personnel expenses (RM) / year

PA Gross
(RM)

PA
Growth

2015

2016

2017

2018

2019

24,000.00
28,800.00

5%
5%

25,200.00
30,240.00

26,460.00
31,752.00

27,783.00
33,340.00

29,172.00
35,007.00

30,631.00
36,757.00

12,000.00

5%

12,600.00

13,230.00

13,891.50

14,586.00

15,315.00

12,000.00

5%

12,600.00

13,230.00

13,891.50

14,586.00

15,315.00

18,000.00

5%

18,900.00

19,845.00

20,837.00

21,879.00

22,973.00

14,400.00

5%

15,120.00

15,876.00

16,670.00

17,503.50

18,378.00

114,660

120,393

126,413

132,734

139,371

Total payroll (RM) / annum

Financial and Administrative Expenses

Fees paid to obtain a license permit, insurance on vehicles as well as any interest paid on things
related to our company fall under the financial and administrative expenses. Some expenses
such as license or insurance fees can occur on a yearly basis while expenses such as office
stationary and furniture occur only once that is during the purchase of the materials.
Establishment Cost:
No.
Description
Expenses (RM)
1
Registration fee
600
2
Solicitors fee
3,000
3
Domain Name Registration
100
4
Insurance (vehicles, public liability, income protection)
1,000
5
Food Handling Certificate
150
6
Safety equipment (fire extinguishers, first aid kit)
2,000
7
Furniture and Stationary (tables, chairs, cabinets)
8,000
Total
14,850
Running Cost:
No. Description
1 Other Utilities (Internet, phone bills)
2 Business Premise Rental (RM 3,000 per month)
3 Licenses and permit (food license)
Total

Depreciation:
No. Description
1 Depreciation on Cooking Utilities (10% of initial value)
Depreciation on Furniture and Stationary (10% of initial
2
value)
3 Depreciation on Vehicle (20% of initial value)
Total

Expenses (RM)
2,000
36,000
150
38,150

Expenses (RM)
250
800
600
1,650

Loan and Interest Paid

It is assumed that the initial total amount loan from bank is RM 100, 000. Since it is a small
business it will be taken under Personal Loan. It is to be paid in 10 years with a fixed interest
rate of 6% on total loan amount.
Table 3: Total Loan and Interest Paid

Year
1
2
3
4
5
6
7
8
9
10

Balance
(RM)
100, 000
90, 000
80, 000
70, 000
60, 000
50, 000
40, 000
30, 000
20, 000
10, 000
Total

Amount Paid (RM)

10, 000
10, 000
10, 000
10, 000
10, 000
10, 000
10, 000
10, 000
10, 000
10, 000
100,000

Interest Paid
(RM)
6,000
6,000
6,000
6,000
6,000
6,000
6,000
6,000
6,000
6,000
60,000

Total Amount Paid (RM)

16,000
16,000
16,000
16,000
16,000
16,000
16,000
16,000
16,000
16,000
160,000

Fixed and Variable Costs

Table 4: Fixed Cost
No. Description
1
Marketing Expenses
2
Salary
3
Licenses and permit (food license)
4
Other Utilities (Internet, phone bills)
5
Business Premise Rental (RM 3,000 per month)
6
Loan and Interest
7
Depreciation on Cooking Utilities (10% of initial value)
8
Depreciation on Furniture and Stationary (10% of initial value)
9
Depreciation on Vehicle (20% of initial value)
Total

RM (Annually)
13,210.00
114,660
150
2,000
36,000
10,050
250
800
600
145,320

Table 5: Variable Cost

No.
1
2

Description
Raw Material Cost (excluding 6% tax)
Production Expenses (Electricity, Water, Cooking Gas,
Vehicle Fuel, Maintenances)
Total

RM (Annually on 150
daily average)
123,400
14,000
137,400

Break-even Analysis
Total Cost Equation:
Assume average variable cost per unit is RM2
= ( ) +
= (2 ) + 145,320
= (2) + 145,320
According to forecast:
Assume average price per unit is RM5 including catering when necessary
=
= (5.00)
Units
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000

Fixed Cost (RM)

145,320
145,320
145,320
145,320
145,320
145,320
145,320
145,320
145,320
145,320
145,320

Variable Cost (RM)

0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000

Total Cost (RM)

145,320
165,320
185,320
205,320
225,320
245,320
265,320
285,320
305,320
325,320
345,320

Total Cost versus Sales

Total Cost (RM)

600000

500000
400000

Break Even (Units)

Break Even (RM)

48440
242200

300000
200000
100000
0

Sales Unit
Total Cost

Sales

Graph 1: Total Cost versus Sales

Sales (Units)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000

Forecast of Business
Sales Forecast
The sales forecast for The Meals food catering service for the first 5 years of business are
based on the following prospects:

The production volume is based on customers order and it is expected to increase

10% per annum.
The selling price for each order is assumed to be average of RM 5.
There will be 50 orders per meal (150 orders per day).
The selling price of each order is assumed to increase by 20% for each year.
There will only be 6 days per week with sales activity.
There will be low sales activity for the first month in the first year.

Income Forecast

The income will be generated according to average customers order and delivery
charge.
The first month of the first year will be used to set up the business and there will not
be a significance source of income.
There will only be steady increase in sale after the third month in the first year.

Description

Year 1

Year 2

Year 3

Year 4

Year 5

Sales (order)

46,800

51,480

56,628

62,291

68,520

Sales Revenue
(RM)

234,000

308,880

407,722

538,194

710,415

Profit Forecast

The gross profit forecast is obtained by deducting the cost of sales from the total sales
revenue. Net profit forecast will be considered in the income statements.
Direct cost of sales is expected to increase by 10% per annum.

Description
Sales Revenue
(RM)
Direct Cost of
sales (RM)
Gross Profit
(RM)

Year 1

Year 2

Year 3

Year 4

Year 5

234,000

308,880

407,722

538,194

710,415

137,400

151,140

166,254

182,879

201,167

96,600

157,740

241,468

355,314

509,248