Guidance on Entering Assumptions > Assumptions Report No. 2 - Materials/Goods, Other Direct Costs & Purchases
As far as practicable, enter direct and variable (or even semi-variable) costs into this assumptions report as this will facilitate more accurate assessments of break-even and sensitivity analysis and more correctly determine the Cost of Goods Sold. Use Assumptions Report No. 3 for overheads and fixed costs.
Cost of materials/pack or goods for resale (as % sales)
Enter direct costs expressed as percentages of forecast sales. As far as possible, use these cost percentages to embrace all fully-variable costs which move directly in step with sales. Use the item Other direct costs (see below) to handle semi-variable, direct costs and use Assumptions report No. 3 for fixed, indirect and overhead expenses. If necessary, construct a schedule below the report to set out detailed calculations - see Making Simple Changes and especially Plugging New Variables into an Existing Variable.
In the case of a manufacturer, enter total cost percentages for raw materials, bought-in components, packaging, subcontracting, freight inwards and other related costs. For a retailer or distributor, enter total cost percentages covering cost of goods for resale, freight inwards and other related items that can be directly linked to the cost of sales. For service businesses, enter cost percentages to cover sub-contracting and other significant external direct and fully-variable costs.
Cost of materials/packaging or goods for resale ($000)
Based on sales forecasts and cost of materials/pack or goods for resale (as % sales).
Desired inventory (stocks) of materials/packaging or goods for resale ($000)
Enter target levels for the two years. The opening value should be entered directly into Exl-Plan’s opening balance sheet.
Purchases of materials/packaging & goods for resale
Based on: Cost of materials/packaging or goods for resale + closing inventory - opening inventory.
Direct labor (Persons)
Enter projected annual average head count for direct staff. If it is not feasible to project direct labor numbers, use "1" as the total staff number. Then, enter a combined total payroll cost for all direct labor instead of an average individual payroll cost (this works on the basis that 10 persons at $20,000 per year equates to 1 person at $200,000 per year). If this approach is used, the calculation of total employment numbers in the Ratio Analysis Report will not be correct.
Direct payroll/benefits cost ($000/person)
Use an average annual payroll cost. This should include all related expenses, perks, pensions as well as related social insurance/security items which are usually payable in arrears to the State (or other comparable organizations).
Other direct costs ($000):
The supplied variable descriptions that are unprotected can be altered or ignored. Note that any revised descriptions will be automatically updated in the Cashflow Projections.
Cost of sales ($000)
Based on: Cost of materials/packaging or goods for resale + Direct payroll/benefit costs + Other direct costs.
Assumptions Report No. 1 - Sales Forecasts
Assumptions Report No. 3 - Overhead Expenses
Assumptions Report No. 4 - Fixed Assets
Assumptions Report No. 5 - Funding, Interest Rates & Related Items
Assumptions Report No. 6 - Sales & Related Taxes
Assumptions Report No. 7 - Year-End Credit Balances
Opening Balance Sheet
Prior-Year Income Statement
Detailed Guidance on Generating Projections
Guidance on Entering Assumptions