Preliminary Design Report

Pg. 08Business Case

ContentsTo Our Stockholders1Financial Summary2Financial Statements2Notes to Financial Statements2Independent Auditors Report2Contact Information2Company Information2

Table of Contents

Analysis of Competitive Products We have analyzed many cheese grinders in Amazon and Walmart websites. Below is the table of comparison for different brands of cheese grinders.

BRANDSZyliss Classic Rotary Cheese Grater / Grinder

Presto 02970 Professional Salad Shooter Electric Slicer/Shredder/ Grinder

Ikea Stralande Rotary Cheese and Food Grater, White , Right or Left Hand

Product Dimensions

6.5 x 5 x 3 inches12.5 x 11.8 x 5 inchesNot Provided, Similar to

WeightApprox. 0.8 pounds4 pounds1 Pound

Price16 USD

46 USD34 USD

Dish Washer SafetyDishwasher safe

Only Removable PartsDishwasher safe

MaterialPlasticPlasticPlastic

WarrantyNo WarrantyTwo year parts limited warranty

No Warranty

Cutting ItemsSoft Cheese , Hard Cheese, VegetablesSoft Cheese , Hard Cheese, VegetablesSoft Cheese , Hard Cheese, Vegetables

BRANDSNorpro 339 Stainless Steel GraterBrowne-Halco 746607 Stainless Steel Rotary Cheese Grater

Stainless Steel 1 1/2 HP Electric Cheese Grater - 110V

Product Dimensions

8.2 x 3.2 x 4.2 inches(8 High) 8.2 x 3.6 x 2.8 inches14 13/16 Inches X 15 1/2 Inches X 10 3/4 Inches

WeightLess than 1 Pound1 Pound

Price5.6 USD

26.5 USD700 USD

MaterialStainless steelStainless steelStainless steel, Cast Iron

Dish Washer SafetyDishwasher safe

Dishwasher safe

Dishwasher safe

Not ApplicableNot ApplicableCSA approved, NEMA Plug

WarrantyNoNoExtended 2 year

Cutting ItemsSoft Cheese , Hard Cheese, VegetablesSoft Cheese , Hard Cheese, VegetablesSoft Cheese , Hard Cheese, Vegetables

BRANDSNorpro 338 Stainless Steel 3-Drum Grater

American Metalcraft PCG9 Hand Cheese Grater

American Metalcraft R1464 Hand Held Stainless Steel Grater

Product Dimensions

2 x 2.2 x 7.5 inchesNot Available Not Available

WeightLess than 1 PoundLess than 1 PoundLess than 1 Pound

Price14 USD8 USD15 USD

MaterialStainless SteelPlasticStainless Steel

Dish Washer SafetyYesYesYes

Extra AttachmentWith 2 more cutting pattern drumWith 2 more cutting pattern drumSingle Drum

Cutting ItemsSoft Cheese , Hard Cheese, VegetablesSoft Cheese , Hard Cheese, VegetablesSoft Cheese , Hard Cheese, Vegetables

After analysis, we found following things:1- There is no product which we can change cutting speed and torque for cutting. 2- Motor driven cheese grinders are very costly due to high cost of motor.3- There are hardly any crank driven cheese grinder which are selling below 8 USD.4- Most of cheese grinders except automatic grinders have weight below 1 pound.Business CaseAssumptions: 1- Through market research, the investors concluded that a good quality product with the following unit price structure would provide the corresponding sales volume in the next 5 years.Pricesales yr. 1sales yr.2sales yr.3sales yr. 4sales yr. 5

$4.001,450,0001,450,0001,450,0001,450,0001,450,000

$5.001,350,0001,350,0001,350,0001,350,0001,350,000

$6.001,250,0001,250,0001,250,0001,250,0001,250,000

$7.00825,000825,000825,000825,000825,000

$8.00400,000400,000400,000400,000400,000

2- Total waste in material is around twenty (20) percent.3- Ten (10) Percent extra factor in price escalation.Estimated product cost:

Estimated Product Cost per Unit

Estimated Weight1 lb. + (10 %) / (-30 %)20 % Steel78 % Plastic2% Rubber

=1.1 lb. to 0.7 lb.

Raw Material Cost

Plastic @ 0.9-1.5 $/ lb.Steel @ $ 2 - 2.5 / lb.Rubber @ $ 1.8 - 2.5 / lb.

Estimated Raw Material Cost= (1.1*0.2*2.5+1.1*0.78*1.5+1.1*0.02*2.5)*1.2 =2.2704USD

Estimated development effort:Engineering and Design Hours

Design Hours300

Engineering Hours200

Engineering and Design Cost @ $50/hr.25000USD

Labor Cost

Mold Making Time400hours per 10000 Pieces

Mold Setting Time0.5hour per day

Injection Molding Time60 pieces per hour per machineTotal 4 Machines

Blade Manufacturing Time60 Pieces per hour forming machineTotal 4 Machines

Assembly Time10 Min per Assembly line per piece

16, Assembly lines, One assembly line have 10 labors.

No. of Shifts of 8 hours2

Labor Cost Asian CountriesUSD 2 per hour

Total Labor Cost Per Piece0.970972222USD Per Piece

Sales yr. 1Labor CostMaterial Cost

1,450,0001407909.7223292080

1,350,0001310812.53065040

1,250,0001213715.2782838000

825,000801052.08331873080

400,000388388.8889908160

Marketing and support costs:Overhead Administrative Cost5 Percent of Revenue

Marketing Cost5 Percent of Revenue

Inventory Cost2 Percent of Revenue

Shipping Cost (1 ton=2200 Pieces)500 USD Per 1 ton

Insurance Cost0.1 Percent of Revenue

Cost of Product ( By self-Manufacturing)

Sales Unit PriceRevenueNo. Sales yr. 1Labor CostMaterial CostMarketing &Support CostSales TaxTotal CostCost Per Unit

$4.005800000145000014079103292080103134572500064563354.45

$5.006750000135000013108133065040112356884375063431714.70

$6.007500000125000012137152838000119159193750061808064.94

$7.005775000825000801052187308088627572187542822825.19

$8.00320000040000038838990816047810940000021746585.44

Cost of Product if Parts are Manufactured by Suppliers and Assembled at Owner factory

Sales Unit PriceRevenueNo. Sales yr. 1Labor Cost @ 50%Material CostMarketing &Support CostSales TaxTotal CostSupplier Profit @ 25%Cost Per Unit

$4.005800000145000070395532920801031345725000575238071904754.96

$5.006750000135000065540630650401123568843750568776471097065.27

$6.007500000125000060685828380001191591937500557394969674365.57

$7.0057750008250004005261873080886275721875388175648521955.88

$8.003200000400000194194908160478109400000198046424755796.19

Total Capital Invested:Total Capital Invested

Shareholder Capital600000Debt600000

Depreciable Capital530000

Rent Cost40000

Depreciation Expenses of Capital Equipment =15 Percent Per Year ( Useful Life 5years)

Salvage Value of Machine after 5 Year = 10 Percent of Capital Equipment Cost

Depreciation first Year79500

Profit before/after taxes:Self-Manufacturing:

Sales Unit PriceNo. Sales yr. 1RevenueTotal CostProfit( PBITD)InterestIncome TaxDepreciationNet ProfitProfit MarginROI (%)

$4.0145000058000006456335-65633560000079500-795835-10.2-132

$5.013500006750000634317140682960000104049795001632816.427.2

$6.01250000750000061808061319194600003777587950080193621.3133.6

$7.0825000577500042822821492718600004298157950092340334.9153.9

$8.0400000320000021746581025342600002896037950059623947.199.3

Manufacturing by Sub Supplier and Assembly by Chi-Chi Grinder

Sales Unit PriceNo. Sales yr. 1RevenueTotal CostProfit(PBITD)InterestIncome TaxDepreciationNet ProfitProfit MarginROI (%)

$4.0145000058000007190475-139047560000079500-1529975-19.3-254.9

$5.0135000067500007109706-35970660000079500-499206-5.1-83.2

$6.012500007500000696743653256460000141769795002512957.641.8

$7.082500057750004852195922805600002588417950052446319.087.4

$8.04000003200000247557972442160000199326795003855929.264.2

Notes to Financial StatementsAccountsWhen you have a document that shows a lot of numbers, its a good idea to have a little text that explains the numbers. You can do that here.Independent Auditors ReportUnqualified Opinion

Contact InformationTo replace a photo with your own, right-click it and then choose Change Picture.NameTitleTel [Telephone]Fax [Fax][Email Address]NameTitleTel [Telephone]Fax [Fax][Email Address]

NameTitleTel [Telephone]Fax [Fax][Email Address]

Company InformationChi-Chi Cheese GrinderGainesville, FloridaTel [Telephone]Fax [Fax][Website]