You have invented the first maintenance-free jet wax called "Jetwax 100." Jetwax 100 can last up to 1 year on any plane surface. In order to start your business, Clean Jet Products, you have invested all of your savings, the savings of your parents, and the savings of some of your friends. Three years have passed since you began selling the engines primarily to small aviation companies that operate single-engine planes, but now the big aviation companies are requesting your products. Sadly, you are already operating at full capacity. There is a need to switch from small-and-medium sized companies to big commercial corporations, but this would require a large infusion of funding. Space, equipment, employees, etc., all need to be increased.
It’s currently January 1, 20X3, and you’ll be going on Shark Tank in 2 weeks. Using the information below, create your 5-year Sales, Cost of Goods Sold (COGS), and Gross Profit forecast for the years 20X3-20X7.
1. Actual Sales
2020= $1,200,000
2021= $1,500,000
2022= $$1,875,000
2. Because you feel your most recent sales are the best predictor of future sales, you weight your sales as follows: W1 = 0.2 and W2 = 0.8
3. You are certain you can get volume discounts on your parts and materials now that your Sales are expected to increase. So, you estimate your COGS will be 52% of Sales, which is less than it has been in the past.
Conduct a 2-year weighted moving average to forecast the annual sales for the years 20X3-20X7. Place your results on the Sales line of the Milestone 1 Sales Forecast tab in the highlighted area.
Using the Percent-of-Sales method, compute Cost of Goods Sold. Then compute Gross Profit. Place your results on Milestone 1 Sales Forecast tab in the highlighted area.