The Giving Flower is a start-up company selling origami flowers at farmers markets in the San Francisco Bay Area, targeting environmentally conscious consumers. With no direct local competitors and lower costs than online alternatives, the company focuses on offering quality products with high perceived value. The financial analysis includes detailed cost projections and sales forecasts, indicating expected growth beyond breakeven in the first year.

1. The Giving Flower
Valeria Gomez, Pierce McManus, Jordan Zenger.
Accounting 1C

2. 2
I. General Information
1. Industry/ Market Information
The Giving Flower is a small start-up company that produces and sells origami flowers
in several different farmers markets in the San Francisco Bay Area. These flowers are
perfect for any occasion as they provide amazing ambiance with zero required
maintenance or water in our current drought. Our business travels around setting up
our cart in a new location four times a week. We are initially planning on visiting the
farmers markets in San Jose, Los Gatos, Mountain View, and Los Altos. By going to these
markets we are accessing the consumer in a niche market. The potential market
penetration for these flowers is extremely high. As most of our competitors only
operate through an online presence we are beating them to the punch, with a small
operation that limits total overhead costs.
2. Customer Information
Our target customer population consists of people who frequent farmers markets. The
paper flowers that we produce fit perfectly into the vibrant setting that attracts
consumers to the farmers markets. The perfect customer is one who is environmentally
conscious that is perusing farm fresh organic produce through the farmers themselves.
These consumers are perfect for our company because they are willing to pay more
money for a product with higher perceived value. Our product, gorgeous paper flowers,
last much longer than regular flowers, providing a better value than fresh cut flowers
for a comparable cost.

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3. Competitor Information
There are no direct competitors in the San Francisco Bay Area. This means that there
are no stores or companies who are already using the idea allowing The Giving Flower
to have a large potential market share. There are several online competitors who sell
origami floral arrangements, but their prices are considerably higher than The Giving
Flower’s. This insures that the consumer’s costs are higher when purchasing through a
competitor, as you have to account for shipping costs, and in a world of instant
gratification, wait for delivery. Typically, at farmers markets, people are competing with
one another trying to sell food, but we are not in the market for food, so therefore we
can be price setters. We are solely competing with flower shops in local areas, which
allow us to know our competition intimately. To out produce, and to outdo these
aforementioned competitors, our company only has to highlight the immense benefits
reaped from purchasing our products in comparison to the alternative.
4. Product/Service Information
We fold, create, and sell paper flowers at farmers markets. We have a selection of
flowers for our customers to choose from that range in color. Our creations consist of
folded paper that we then attach to a stem and secure to a box or tie in a bundle. To
access multiple markets we offer the consumer three different products, bouquet, solo
flower, and an orchid, depending upon their need. In addition to this every flower or
flower arrangement we produce includes The Giving Flower’s business card. This card
includes contact information, along with the URL for our company’s website. The
Giving Flower offers unparalleled service in comparison to our competitors. When

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visiting The Giving Flower’s website you can see our upcoming schedule of cart
appearances, and also order a specialized bouquet or flower arrangement with your
choice of colors. This order can be either delivered on a specific day, or be picked up
from our cart if you expect to see us at the farmers market.
II. Technical Analysis
1. Cost Analysis
We identify several fixed cost for our three products. These fixed costs are calculated
monthly and include:
Fixed Costs
Cost Quantity Total Cost
Transportation $0.60 400 $240
Advertising $100.00 1 $100
Website Maintenance $100.00 1 $100
Overhead $60.00 1 $60
Farmer's Market Monthly Fee (Rent) $60.00 4 $240
Total Fixed Cost $740
We also identify our product’s variable costs. Each product incurs different variable costs.
The giving flower’s variable costs are:
Variable Costs
Total Cost Quantity Cost per Unit
Business Cards $9.99 500 $0.0200
Tissue Paper $17.39 100 $0.1739
Paper $20.38 1000 $0.0238
Pipe Cleaners $17.99 100 $0.1800
Box $1,500.00 1000 $0.7500
Labor $10.00 30 $0.3300
Ribbon $10.00 9000 $0.0010

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According to each product, the variable cost per unit is:
VARIBLE COST PER PRODUCT
Bouquet Solo Flower The Orchid
Item Total
Cost
Quantity Cost/
Unit
Total
Cost
Quantity Cost/
Unit
Total
Cost
Quantity Cost/
Unit
Business Card $0.02 1 $0.0200 $0.02 1 $0.0200 $0.02 1 $0.0200
Tissue Paper $0.17 2 $0.3478 $0.17 1 $0.1739 $0.17 2 $0.3478
Paper $0.02 12 $0.2856 $0.24 1 $0.2380 $0.24 6 $1.4280
Pipe Cleaners $0.18 12 $2.1600 $0.18 1 $0.1800 $0.18 1 $0.1800
Box $0.00 0 $0.0000 $0.75 1 $0.7500 $0.75 1 $0.7500
Labor $12.00 0.33 $3.9600 $0.33 1 $0.3300 $0.33 6 $1.9800
Variable Cost
/ Unit
$6.7734 $1.6919 $4.7058
We are estimating to sell in an average 1,200 units per month. By determining how many
units we would sell, we can identify the fixed cost per unit, therefore, our operating income
per unit.
Estimated Production after One Year of Operations
Month Semester Year
$740.00 1 6 12
Total fixed cost/ month $740 $4,440 $8,880
Expected Units 1200 7200 14400
Fixed cost per unit $0.62 $0.62 $0.6167
After identifying our variable and fixed costs and analyzing our indirect competitors, we
could determinate the sale price per product.
Per Unit Bouquet Solo Flower Orchid
Sales Revenue $15.00 $4.50 $12.00
Variable Cost $6.77 $1.69 $4.71
Contribution Margin $8.23 $2.81 $7.29
Fixed Cost -based on 1200 units- $0.62 $0.62 $0.62
Operating Income $7.61 $2.19 $6.68

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Since The Giving flower produces and sells three different products, it is crucial to
determinate how much is the contribution margin per product based on the different
quantities sold per product. After analyzing our competitor we determinate that for every
five bouquets we sell, we also sell three solo flowers and two orchids.
Weighted Average Contribution Margin
Bouquet Solo Flower Orchid Total
Sale price per unit $15.00 $4.50 $12.00
Variable cost per unit $6.77 $1.69 $4.71
Contribution Margin per unit $8.23 $2.81 $7.29
Expected Sale mix in units 5 3 2 10
Contribution Margin $41.13 $8.42 $14.59 $64.15
Weighted-average Contribution Margin (85.15/ 10) $6.41
Knowing the weighted-average contribution margin of our three products, we could
determinate the breakeven sales as follow:
Breakeven sales
Bouquet Solo Flower Orchid
Units 58 35 23
Price per Unit $15.00 $4.50 $12.00
Breakeven point in dollars $865.22 $155.74 $276.87
Total Sales Revenue $1,297.83
COGS PER unit $3.43 $1.98 $3.34
COGS breakeven units $197.85 $68.48 $77.12
Total Cost of breakeven sales $343.44
COGS margin of sales 0.26
After determining the breakeven sales for our products, we could project our sales growth
for the first year based on the breakeven sales. We project that the first six months of
operations our sells will be 30% beyond the breakeven point. After six months of operation,
we expect our sales to increase 50% beyond the breakeven point. After one year of

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operations we expect to product and sell the initial estimated 1200 units, on which we
calculate our fixed cost per unit.
Projection of growth of sales based on Breakeven sales
Percentage of Breakeven sales 30% 50%
Amount expected $389.35 $648.91
Total amount of sales $1,687.17 $1,946.74
Increase of COGS $103.03 $171.72
Total COGS $446.48 $515.17
COGS margin of sales 0.26 0.26
Since we want a higher operating income, we determinate that our sale prices could be
higher and still being competitive. Our final sales revenue for the first year of operation
based on the different increases will be:
30% above breakeven Bouquet Solo Flower Orchid TOTAL
Mixed sale units 75 45 30 150
Sale Price $18.00 $5.00 $15.00
Sales revenue $1,349.74 $224.96 $449.91 $2,024.61
COGS $257.21 $89.02 $100.25 $446.48
50% above breakeven Bouquet Solo Flower Orchid TOTAL
Mixed sale units 87 52 35 173
Sale price $18.00 $5.00 $15.00
Sales revenue $1,557.39 $259.57 $519.13 $2,336.09
COGS $296.78 $102.71 $115.68 $515.17

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2. Budgets
We calculated three operating budgets for our first two years of operations. The first
year of operation includes two operating budgets. The second year of operation
includes one operating budget. The three operating budges are as follow:
a) Operating Budget for the first six months of operations: July-December
2014
 Sales Budget
The Giving Flower
Sales Budget
July-December 2014
30% above
breakeven
point
July August September October November December
July-Dec.
Total
Cash Sales $2,021.61 $2,021.61 $2,021.61 $2,021.61 $2,021.61 $2,021.61
Total Sales
100%
$12,129.66
 Inventory, Purchases and Cost of Goods Sold budget
The Giving Flower
Inventory, Purchases, and Cost of Goods Sold Budget
July-December 2014
30% above
breakeven point
July August September October November December
July-Dec
Total
C.O.G.S. (26% of
Sales)
$446.48 $446.48 $446.48 $446.48 $446.48 $446.48 $2,678.88
Desired Ending
Inventory
0 0 0 0 0 0
Total inventory
Required
$446.48 $446.48 $446.48 $446.48 $446.48 $446.48

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 Operating Expense Budget
Before we could prepare our operating expenses budget for the first three months, we had
to calculate the total variable cost of labor for the mixed products.
 Budgeted income Statement:

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We use straight-line depreciation to determinate our depreciation expense of our cart.
We determined that the useful live is five years with zero residual value.
Straight line depreciation
Cart cost Years Depreciation expense Monthly Dep. Exp. 12
$1,896.00 5 $379.20 $31.60
b) Operating Budget for the second half six months of operations: January-
June 2015
 Sales Budget
The Giving Flower
Sales Budget
January-June 2015
50% above
breakeven point
January February March April May June
Jan-June
Total
Cash Sales $2,336.09 $2,336.09 $2,336.09 $2,336.09 $2,336.09 $2,336.09
Total Sales 100% $14,016.54

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 Inventory, Purchases and Cost of Goods Sold budget
The Giving Flower
Inventory, Purchases, and Cost of Goods Sold Budget
January-June 2015
50% above breakeven
point
January February March April May June
Jan-June
Total
C.O.G.S (26% of Sales)
$515.17 $515.17 $515.17 $515.17 $515.17 $515.17 $3,091.02
Desired Ending
Inventory
0 0 0 0 0 0
Total Inventory
Required
$515.17 $515.17 $515.17 $515.17 $515.17 $515.17
 Operating Expense Budget

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 Budgeted Income Statement

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c) Operating Budget for the second year of operations: July 2015- June 2016
For the second year of operations, we expect our variable and fixed costs to increase by 3%
Increased Fixed Costs by 3%
Cost Quantity Total Cost
Transportation $0.60 400 $247
Advertising $100.00 1 $103
Website Maintenance $100.00 1 $103
Overhead $60.00 1 $62
Farmer's Market Monthly Fee (Rent) $60.00 4 $247
Total Fixed Cost $762
We also determine an increase of 3% of the cost of goods sold. The new amount of Cost of
Goods Sold for all three of our products is as follow:
Bouquet
Solo
Flower
Orchid
Cost of Goods $3.43 $1.98 $3.34
Increased COGS by 3% $0.10 $0.06 $0.10
Total Increased COGS $3.53 $2.04 $3.44
Estimated 1200 units Bouquet
Solo
Flower Orchid TOTAL
Mixed Sales 600 360 240 1200
Sale Price $20.00 $6.00 $17.00
Sales Revenue $12,000.00 $2,160.00 $4,080.00 $18,240.00
COGS with 3% increase $2,119.74 $734.18 $825.65 $3,679.57

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 Sales budget and Inventory, Purchases and Cost of Goods Sold July 2015-June 2015.
 Operating Expense budget
Our company expects an annual growth of 75% after the first year of operations. Due to
this we have adapted our expense budget for the recurring year with an expected increase
of 20% in variable labor cost.

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 Budgeted Income Statement