rice, rice baby business plan
TRANSCRIPT
Lexi Stefanatos . Kelly Steinmetz . Kia Pouliot . Anne‐Geneviève Guay . Laura Bergman
BUSINESS PLAN December 8th, 2009
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Table of contents
EXECUTIVE SUMMARY……………………………………………..……………………………………………………….
MISSION…………………………………………………………………………………………………………………………....3 PRODUCT DESCRIPTION…………………………………………………………………………………..…………….……...3 OBJECTIVES………………………………………………………………………………………………………………………..3 MANAGEMENT TEAM PROFILES…………………………………………………………………..………….….……..…3‐4 SWOT ANALYSIS……………………………………………………………………………………………….……….……4‐5
TYPE OF BUSINESS………………………………………………………………………………………………………………5
BUSINESS ENVIRONMENT……………………………………………………………………………………….……..…
INDUSTRY OVERVIEW……………………………………………………………………………………………………….5‐6 POSITION IN INDUSTRY……….……………………………………………………………………………………………..…6
MARKETING PLAN……………………………………………………………………………………………………….……
MARKET ANALYSIS…………………………………………………………………………………………………..………….7 PRICING STRATEGY………………………………….…………………………………………………………...…………..…7 ADVERTISING PLAN……………………………………………………………………………………….…………………7‐9 DISTRIBUTION PLAN……………………………………………………………………………………………………………9
FINANCIAL PLAN………………………………………………………………………………………………………………
CAPITAL COSTS………………………………………………………………………………………………………….……….9 OPERATING COSTS……………………………………………………………………………………………………………....9 ESTIMATED TOTAL REVENUE……………………………………………………………………………………………9‐11
CHARITY DESCRIPTION………...…………………………………………………………………………………………….11 APPENDIX A (BLANK SURVEY)………………………………………..………………………………………1213
APPENDIX B (MARKET RESEARCH)……………………………………………………………….……..…1417
APPENDIX C (LOGO)……………………………………………………………………………………………….….…18
APPENDIX D (LETTER TO PARENTS)…………………………………………………………………..............19
APPENDIX E (CASH FLOW)……………………………………………………………………………….……..2021
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Executive Summary Mission Our mission is to introduce a healthy and original option to the ECS Stock Exchange market. We will promote balanced eating habits as well as support environmental consciousness. We will provide the ECS community with a filling and enjoyable lunch while also raising awareness about the vast differences of food supply around the world particularly in North America and Southeast Asia. Notre mission est d’introduire sur le marché du ECS Stock Exchange une nouvelle option originale et santé. Nous voulons encourager les bonnes habitudes alimentaires tout en donnant notre appui à la cause environnementale. Nous fournirons à la communauté d’ECS un dîner agréable et nourrissant tout en sensibilisant les gens sur les vastes différences au sujet de la nutrition autour du monde et particulièrement en Amérique du Nord et en Asie du Sud‐Est. Product Description The Rice, Rice Baby Company will be selling boxes of rice with sauce and topping choices. We will only buy fair trade rice in effort to help the countries that rely on rice as a main economic industry. Our rice will be sold in Chinese‐style food boxes. We will be serving the rice with the following sauce choices: soy sauce, teriyaki sauce. Students and staff will also have the option of the following topping choices: chicken, peas, broccoli and corn. With every purchase customers will be given a complimentary fortune cookie. Objectives The assurance to achieve the objective of profit maximization is the key focus of our private corporation. To achieve this goal we will provide the ECS community with our product, rice, over a three‐day period. We would also like to provide the school with an understanding of social issues that surround the production of rice and the important of environment awareness. Management team profiles The Team Lexi Stefanatos – CEO Lexi is the CEO of Rice, Rice Baby, and has many of the qualities that make her well suited for this position. She has strong leadership and teambuilding abilities, always in control but without overpowering the ideas of others. Lexi also has good judgment, she will always have advice to steer the company in the right direction. She is performance‐driven which means you can be confident that she will always be striving to make everything the best that it can be. Finally, Lexi is very technologically savvy, and in this day in age these skills are indispensable.
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AnneGeneviève Guay –Director of Communication Anne‐Geneviève is the Director of Communications and her knowledge in public relations is very useful in this position. She is very charismatic when talking which makes interactions with workers and customers easy. She is also a confident speaker, which encourages people to listen to what she has to say. Lastly, Anne‐Geneviève is also a strong asset to the company thank to her bilingual abilities. Kia Pouliot – Director of Marketing Kia’s position as Director of Marketing is very appropriate due to the contributions she can make to the company. She has creative ideas and strategies to encourage customers to purchase our product. She is also aware of the wants and needs of potential customers, which enables the company to have appropriate advertising. Kia is able to work well with other team members in order to incorporate their ideas into marketing plans. Laura Bergman –Director of Finance Laura makes a good Director of Finance thanks to her sharp eye. She is able to pinpoint future issues and help to think of innovative ways to solve them. Laura is good with numbers and knows how to appropriately price products. She is often thinking of the best way to maximize profits while still keeping the customer happy. Laura is extremely enthusiastic about all work that she does. Kelly Steinmetz – Director of Publishing and Editing As the Director of Publishing and Editing, Kelly fulfills her job well. She has a unique eye for design, which helps the company to produce distinctive advertisements. She also has very developed writing skills, which enables her to successfully edit texts that need to be written. Kelly’s overall ability to add great finishing touches to any piece of work – be it visual or textual adds to the company’s success. SWOT analysis Strengths: Among the Student Stock Exchange groups at ECS, there are only two businesses including Rice, Rice Baby that will be offering main course meals. Our product is healthy and our idea is original. We offer many different options of sauce, vegetables, and protein. This variety will help discourage product fatigue. We have many creative ideas in marketing and production. After our market research was analyzed, we concluded that our product is widely enjoyed in the ECS community. Our company holds a strong global awareness position, as we will only buy fair trade rice. The supplies needed for the production of our product is easily accessible and financially attainable, such as rice cookers and packaging materials.
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Weaknesses: Our product is new on the market so consumers are not sure what to expect from it while other companies have products, which are easily understood. Therefore, we have to promote the originality of our product greatly. Potential conflicting ideas and thoughts within our team could pose a weakness. Time constraints due to the nature of our product and the necessary preparation time could affect the quality. Limited cash reserves would limit our freedom to expand our ideas and deal with problems that may arise. Opportunity: Rice, Rice Baby is starting up in an ideal environment because there are no other products available on the market that are similar to ours. This means plenty of new prospective clients. Also, the fact that our company will be using fair trade rice may encourage prospective clientele, because the working conditions of people around the world is a very pertinent issue. Our originality and global awareness will hopefully attract many members of the ECS community. Threats: There is a possibility that the product will be unappealing to certain members of the ECS community. Also, some students and faculty bring their own lunch to school and will plan buying only desserts and/or snacks. There are others who may not want to buy a main meal everyday, while competing companies, such as cupcakes, will have products that buyers will want to purchase more frequently. Type of business We will be a legal corporation where the five partners will be equal shareholders. We will establish out business as a legal corporation to firstly, limit our personal liability, secondly, to take advantage of expense and tax benefits that are provided as part of a legal corporation. For example, we could capitalize any investments (any equipment or hardware) that are eligible under Canadian tax laws. Business Environment Industry overview Our market consists of diverse groups of the ECS community and appeals to each one for different reasons. Firstly, we appeal to the Junior School demographic because we offer a product that they are most likely pretty familiar with, enjoy eating and that parents would be happy to feed their children. We are offering a fairly nutritious main meal and are one of the only businesses doing this. Because parents must approve the order forms, and we are offering something parents would approve of, we believe that this will be a factor to our success. Secondly, we appeal to the ECS Middle and Senior School demographic because our product is
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enjoyable to the general student’s palate, it is approachable and customizable to everyone’s likes. In addition to being universally delicious, we also appeal to the students with conscience regarding the health and/or ethics of the food they consume. Rice, Rice Baby uses only fresh, simple and fair trade rice in its product, so whatever our customers’ concerns may be, we’ve got their interests taken care of. Thirdly, we appeal to the ECS staff because, as for with older students, we are offering a simple and familiar delicious main meal that also takes health and global concerns into consideration. Overall, we believe that our business covers all of the bases necessary to be successful on both an ethical and economic level. Trends Our product is unique because we are one of the only businesses offering a main meal. That in itself is extremely significant as when purchasing from SSX because people generally do consider a main meal to be an important purchase, everyday. During the business days of SSX in the past it was clear that desserts or “treats” are usually in abundance but there was less choice of main meals, but still a very high demand for them. There was also a severe lack of healthier options to choose from and still a demand for them. Position in industry Our product will cater to the trends of the past because we are filling the void in the market of main meal options and the even more significantly the void of healthy options. We offer a main meal that can be enjoyed by mostly everyone of all ages by taste alone, but we also appeal to the consumers whose demand for a healthier choice was not satisfied up to this point and cannot be satisfied as greatly by any other business. Our niche Our target market is open to all of the ECS community because, as stated in our industry overview, we appeal to a large audience by the nature of our product and business. Each demographic in out market is drawn to our product for different reasons. We satisfy the demand of consumers who want a healthier alternative at the SSX. This health‐conscious consumer can be a Junior School parent who must approve their child’s meal, a Middle/Senior school student who is aware and concerned about proper nutrition or a staff member who has healthy eating habits and makes healthy choices in their everyday life. By making our products with fair trade rice, we are also and ethical business. Once again, this can be an appealing factor to any age group of our market. Anyone can be attracted to this aspect of our business, but it certainly sets us apart from any other business of the past or present of the SSX market. Simply stated, our product is delicious. No matter what outside concerns you may or may not have, everyone wants to enjoy whatever food they will consume. Everyone knows what rice is and has most probably enjoyed it on many occasions in similar preparations to the one we are offering in the past. Therefore, people are very likely to buy our product with the faith that they will enjoy it as they do when preparing it themselves. We are offering a product that will most certainly satisfy everyone’s tastes.
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Marketing Plan Market Analysis Our 50 surveys were given out the week of the October 12th. To see a blank survey see appendix A. For graphical representation of the results see appendix B. Based on our market research we have concluded the following:
‐ Even though he majority of our surveyed market has an interest in buying brown rice, we have discovered that it is not possible to buy high quality brown rice grown outside of the US, therefore, we will only be serving white rice.
‐ Given that the vegetable choices were relatively aside from onions, we will be selling peas, broccoli and corn only.
‐ There was an overwhelming request for chicken in our surveyed market and only a small interest in other protein choices; therefore we will only be selling chicken.
‐ Soy and teriyaki sauce together account for 85% of our surveyed market; therefore we will be selling only those two sauces.
Based on the above research and conclusions, we will have three different product types to offer our customers:
‐ Product A = plain rice ‐ Product B = rice + sauce ‐ Product C = rice + sauce + toppings
We will use these three product models to develop our financial plan. Pricing strategy We know that the most effective new businesses not only use the cost plus strategy to determine the price of their product but also thrive to depend more on the price sensitivity analysis. Therefore, we will use both methods to determine the price and then marry them, in order to find the most effective price that the market is sure to accept. As a new business, it is important that we take into consideration what our market is willing to pay for our product and not only what it will cost us. Rice, Rice Baby could be severely let down if we did not consider our price sensitivity analysis by either pricing too high or too low from the market’s acceptance. Advertising plan Logo: See appendix C Slogan: Pick it. Box it. Eat it. Translation: Choisis. Emballe. Savoure. Business card: provided inside this project folder
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Strategy
Rice, Rice Baby will use the most effective and simple advertising possible. Our social awareness will be a strong factor in our advertising campaign. The three sponsors that we will be requesting support from are Ms. Phelps, Mr.Cox and Mr. Fortin. We chose these people because of their strong presence in the school as well as their creative nature to compliment our advertising strategy. We would also like to try new innovative forms of advertising this year in all three of the steps to effective marketing: awareness, trial and loyalty. We will also put in place certain incentives for consumers to purchase from Rice, Rice Baby rather than any other company on the market. The first incentive will be the distribution of one free fortune cookie for every purchase made at our company. The second incentive will be a small game to win a t‐shirt with our logo. Everyday, out of the three selling days we have, one girl will receive the winning fortune cookie, which gives them the privilege of winning our t‐shirts. Hopefully, these small incentives will be a big factor in the decision making process of the ECS consumers. Awareness We will be approaching our awareness phase with a strong building up marketing campaign. First and foremost, the movie we will create, the website we will build and the radio jingle we will record will be our main awareness tools. In the beginning we will initiate thought by creating a viral listening of the song Ice, Ice Baby (our theme song). The ECS market will not yet know what relevance this has to the SSX, but soon we will integrate our movie and jingle and the vital connection will be made. Once the market is aware of our product, and consequently can’t get our theme song out of their heads, we will initiate the influx of posters and emails regarding our product. Our website will also have an interactive component which is a game linked to the website www.freerice.com. This website allows you to play a word game in order to win grains of rice to donate to the UN World Food Program. We expect that this interactive component will firstly, attract consumers to our website over others and secondly, reinforce the social awareness aspect of our company. As for the new innovative form of advertising in the awareness phase, we would like to communicate to the parents of the junior school though an email because they play a large role in the decision‐making of this demographic. We would like to communicate via an email sent home explaining the background of our product and our business goals. To see the letter we would like to send see appendix D. Trial For SSX 2010, Rice, Rice Baby would like to integrate a trial phase into our marketing process. As one of the crucial steps to effective marketing we feel that it would be an important step to take in order to ensure our success. The trial phase will be put in place a couple weeks before we leave for March Break. We will take one lunch hour to distribute small samples of our rice to anyone who is interested to test it. As a result, when we come back from March Break,
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students and staff will know what to expect and be very willing to come and purchase more – ensuring success of the third step, loyalty, from the very beginning. Loyalty The third and last important phase of marketing is loyalty. Loyalty is hard to earn in customers, especially over a three‐day period but we are confident that after our marketing strategy is put in place and the trial phase is executed effectively, customers will be satisfied with our product and know what to expect when coming to purchase a lunch at Rice, Rice Baby. Because of the great taste and many options we hope that customers will continue coming to customize their meal everyday. Another factor that will help customers to be loyal are the small incentives we are offering, as described in our strategy. Distribution plan In order for us to have the highest quality and freshest offering of product to our customers, we will require the use of kitchen facilities such as a freezer for the vegetables, a microwave to steam them, access to a sink to make the rice and lots of counter space for the rice cookers. The quality of our food is a very important part of our distribution plan. To ensure freshly made rice, we will best utilize the facilities we have access to in order to achieve our objective. Financial Plan Capital Costs Capital Items Total Cost Amortised Cost/year Rice Cooker $170 $42.50* * Theoretically, we will assume that the rice cooker would last for 4 years, so as a capital cost we can expense it over the four‐year period. We will be buying one large rice cooker and borrowing at least three from other families as further described in our cost of production. Operating costs Theoretically, we would have to expense the following utilities: telephone, gas, heat, and electricity as well as the cost of rent, insurance and maintenance. We will also be paying for advertising and promotion. Estimated total revenue Forecast: Total Production Requirements 45 out of 50 people will buy Rice, Rice Baby 90% of 400 people = 360 people will buy the product over 3 days
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Our research has indicated that 90% of the ECS community would buy Rice, Rice Baby but given that this will be a competitive market, our forecast will assume that half of all ECS consumers that indicated a willingness to purchase will buy within the 3‐day selling period (approximately 200 units per day). Our forecast will be built on the assumption of three customizable product categories:
‐ Product A = plain rice ‐ Product B = rice + sauce ‐ Product C = rice + sauce + toppings
We will assume that of the 200 units sold per day:
‐ 10% (20 units, 60 units over three days) will be product A ‐ 20% (40 units, 120 units over three days) will be product B ‐ 70% (140 units, 420 units over three days) will be product C
Our cash flow projection as well as our production costs will be based on the above assumptions.
Cost of Production Product A Product B Product C
Item Quantity Total Item Cost 10% (60 units) 20% (120 units)
70% (420 units)
Boxes 600 $96 $9.60 $19.20 $67.20 Napkins 500 $10.95 $1.10 $2.20 $7.65 Forks 600 $47.40 $4.74 $9.48 $33.18 Rice 55 X 1kg $302.50 $30.25 $60.50 $211.75 Chicken 3 X 1kg $30 $30 Peas 3 X 2kg $16.47 $16.47 Corn 3 X 2kg $16.47 $16.47 Broccoli 2 X 1kg $5.98 $5.98 Soy Sauce 2 Jugs $27.98 $6.22 $21.76 Teriyaki Sauce 3 Bottles $16.47 $3.66 $12.81 Fortune Cookies
600 $32.00 $3.20 $6.40 $22.40
Total $389.69 $48.89 $107.66 $445.67 Overhead Allocation
(Capital costs)
$170 $17 $34 $119
Total Cost + OH $559.69 $65.89 $141.66 $564.67 Per Unit Cost $1.10 $1.18 $1.34 Above is an itemised list of all the items required for the manufacturing of our product. We have allocated all the costs to our three different product offerings (A, B, C) in order to give us
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an accurate estimate of our unit cost in order to assist us in our pricing strategy. All items food were purchased at Costco and in China Town, t‐shirts for advertising will be purchased at Bang On and Chinese‐style food boxes were ordered from ULINE. Also, many extra materials for presentation were purchased at Bureau en Gros. We will have to buy one large rice cooker, and borrow others from several families with permission. We will be using containers from home to store the food and heat it up at school. After calculating our unit costs, we will marry it with price sensitivity to complete our pricing strategy.
‐ Product A = $2.50 ‐ Product B = $3.25 ‐ Product C = $4.00
Cash flow
To reference the cash flow statement see appendix E. Charity description Through Friends of the World Food Program, we will be donating our profits to the United Nations World Food Program (WFP). The WFP is the largest humanitarian organization in the world, which is working to put hunger in the forefront of political decisions and to promote policies to directly benefit the poor and hungry. WFP hopes to feed at least 100 million people in 80 different countries around the world over the course of 2009. As the food branch of the UN, the WFP meets the emergency needs for food as well as the use of food to support economic and social development around the world. The Friends of the World Food Program is a U.S.‐based, non‐profit organization, which tries to build support for the WFP in the U.S. Friends of the WFP unite many different organizations and individuals in the U.S., which are committed to solving world hunger. They advocate and fundraise to support the life‐saving food assistance programs around the world. We will donate our profit directly to the Friends of the World Food Program, requesting that they send our money to relief efforts for the Southeast Asia disaster. Recently, throughout the 21st century, Southeast Asia has been victim of huge environmental and social disasters. Rice paddies have existed in Southeast Asia for thousands of years and as a main revenue generator for all of Asia, these paddies are an important part of their culture. The maintenance of the rice paddies is extremely important to Southeast Asia and because of the major environmental disasters, they are being destroyed. We chose to send our money to their relief of these Asian countries because we feel that there is a strong relation between out product and the economic and social needs of Southeast Asia. UN World Food Program: http://www.wfp.org Friends of the World Food Program: http://www.friendsofwfp.org
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APPENDIX A
Name:_______________________ Grade:_______________________ Date:________________________
Rice, Rice Baby 1. Would you buy a bowl of rice? Yes / No
2. If so, how many times would you purchase it over the course of 3 days?
- Once - Twice - Three times
3. How much are you willing to spend on a bowl of rice (all rice is served with an option of sauce)? Option A (plain rice):
- $2.00 - $2.50 - $3.00 - $3.50
Option B (rice + toppings):
- $3.50 - $4.00 - $4.50 - $5.00
4. What kind of toppings would you like on your rice?
Vegetables:
- Carrots - Peas - Broccoli - Corn - Onions - Other: ___________________________
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Protein:
- Chicken - Tofu - Other: ___________________________
5. Which sauces would you like on your rice?
- Soy sauce - Plum sauce - Hot sauce - Teriyaki sauce
6. Would you be interested in buying brown rice? Yes / No
Thank you!
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APPENDIX B Demand Curves
‐ Grades 1‐4 were not able to fill in the price section of the survey so these 10 surveys were excluded from this curve
‐ Another two surveys were excluded because of lack of interest in the product ‐ The total amount of surveys included in this demand curve is 38
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Product Interest
White and Brown Rice
‐ Four surveys were excluded because question was not answered
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Toppings
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Sauce Choices
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APPENDIX C
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APPENDIX D
Dear parents of the junior school, Every year, the grade 11 economics elective participates in the Student Stock Exchange (SSX). The SSX involves many Montreal students creating companies and selling products at their respective schools, with all profit going to charity. All students subsequently come together at Loyola High School to be officially judged and potentially win awards. This year at ECS, we have 5 teams participating. In some parts of the world, the verb "to eat" literally means, "to eat rice." As much as half of the daily calorie intake for 50% of the world’s population comes from eating rice. Rice is an important staple on the global menu so we thought we should represent this during the Student Stock Exchange through our company, Rice, Rice Baby. The white iconic grain that we are offering has many healthy qualities (a source of fibre, protein, manganese and selenium). In addition to your choice between rice varieties you can pick your sauce and selected toppings for your rice. The toppings vary from chicken, corn, peas, broccoli and onions, to soy sauce, teriyaki sauce and chilli sauce. Our rice will be served in Chinese‐style take‐out boxes and everyone will be given a complimentary fortune cookie with every purchase. So why should you purchase Rice, Rice Baby? Our rice is definitely delicious, healthy and offers you many options to cater to your personal palate, but buying our rice will benefit more than just you. We wanted to start a business that also gives back. This is why we use only fair trade rice and feature a link on our website to http://www.freerice.com/ which is a website made in partnership with the UN World Food Program that allows you to play word games to help fight hunger though rice donations. We will also be donating our profit to the United Nation World Food Program, requesting our money is sent directly to recovery of Southeast Asia, where rice paddies are incredibly important. Enjoy our rice, ‐The Rice, Rice Baby Team (Lexi Stefanatos, Kelly Steinmetz, Laura Bergman, Anne‐Geneviève Guay, Kia Pouliot) P.S Visit the website of the UN World Food Program yourself and donate! http://www.wfp.org
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APPENDIX E
Cash Flow Statement
Rice, Rice Baby Starting date Feb‐10 Ending Date March‐26 39,898 39,898 39,898
Beginning Day 1 Day 2 Day 3 Total Cash on hand (beginning of month)
CASH RECEIPTS Cash sales‐ Plain Rice 50 50 50 150 Cash sales‐ Rice + Sauce 130 130 130 390 Cash sales‐ Rice + Sauce + Toppings 560 560 560 1,680 Sale of Shares 400 400 Loans received 135.20 135.20 Total cash available 0 0 2,755
CASH PAID OUT Advertising 250 250 Materials and supplies (in COGS) 390 390 Office expense 0 0 Rent or lease: vehicles, equipment 0 0 Supplies (not in COGS) 20 20 Utilities 0 0 Wages 0 0 Other expenses 0 0
SUBTOTAL 660 0 0 0 660 Loan principal payment 135.20 135.20 Dividends Paid 400 400 Donation to Charity 1,560 1,560
TOTAL CASH PAID OUT 660 0 0 2,095 2,755
Cash on hand (end of month) ‐660 0 0 ‐2,095 0 Units sold
Price per unit Day 1 Day 1 Day 2 Day 3 Total Units
Total Sales
$2.50 Product A 20 20 20 60 150 $3.25 Product B 40 40 40 120 390 $4.00 Product C 140 140 140 420 1,680
Total sales 740 740 600 2,220
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Profit Total Sales $2,220.00 Less: Expenses $659.64 $1,560.36