Income Statement

This is the general overview of my homework. I only want the income statement and the description of it done, because this is a group paper and I am responsible of those two sections. Once, I will forward the portions from my team members so you can have the data available for the income statement. Assignment overview: The team is expected to develop a pro forma income statement for this strategy project, including startup costs (show as year 0) and operating  costs and revenue for its first year of operation (first year begins with  first sale).  The income statement should be only to the level of EBIT (Earnings before Interest and Taxes). Assignment Financial Projections: The team will first identify the major cost drivers for this recommended entry strategy (including ongoing operational expenses).   Consider costs of specific risk mitigations required from week 5 and the organizational structure (people costs) required from week 8, as well as other expenses required by this entry mode. The team will develop rough estimates for these major cost drivers, citing all assumptions underlying the team’s estimations. Identify the following categories of expenses: Startup costs:  All costs that must be expended before the first sale is expected to be completed.  These should be people costs as well expenses, such as travel, new marketing materials, prototypes or product modifications if needed, legal expenses,  translator costs, anything that must be expended in order to start up the business as you have defined it.  These would cover the first 3 months or 6 months or whatever time you believe will be required to get the business started. Show these as year 0 on your income statement, with year 1 as your first year of operation. Costs of goods sold: These are the per unit production costs for the product or service you are selling.  If it is a professional service, or a product that requires professional services to design or deliver to the customer, those people costs would be here.  Manufacturing costs belong here if it is a product.  These are variable costs that will be based upon the number of units sold. Operational costs:  These are the costs of running the business after that start up is completed.  These cover all the business functions (e.g., strategic oversight, marketing, sales, human resources, legal, finance, technical support).  These may be largely people costs, depending on the organizational structure you have defined, but consider other expenses, such as telecommunications, rent, supplies and equipment (non-capital), marketing materials, distribution, any outside contracts you have proposed.  These are on-going costs that start after the start-up period ends, but will be incurred whether or not any additional units are actually sold. Specify all assumptions made in developing these cost items. You will need to include any expenses associated with monitoring the progress of your strategic plan, which you will specify in your Balanced Scorecard (e.g., any surveys, focus groups, employee training).  Leave a space for those expenses in your income statement until you have identified them fully in your Balanced Scorecard. If you have identified people costs of monitoring in your financial operations, or costs of training in your human resources, you need not add any additional people costs in this BSC line on your income statement, but your BSC should specify where you have accounted for those costs. The team will separately identify capital investments required in your proposal (e.g., equipment, purchased real estate, expanded plant facilities).  The costs of this capital should be identified, but the interest paid on capital need not be included in your income statement, and you need not consider depreciation of the capital goods in your income statement. The team will then develop rough estimates of revenue potential.  Based on the market size and growth numbers from week 4, and considering competition identified in week 6, the team will develop a market share estimate, with supporting rationale and specifying all assumptions (e.g., about unit price; unit sales). Total costs of the plan will be compared to the potential revenue, to develop an income statement showing EBIT (Earnings before Interest and Taxes). Under what assumptions would the team consider this project to be financially viable? Where are the major risk factors? Which factors must be monitored most closely in the Balanced Scorecard in order to limit risk?