Scenario Two: "What if" Analysis Your client would like to consider adding ice cream cakes to the list of items available for sale. She is wanting to offer cakes with customized cake, ice cream decorations. She thinks she can sell 20 small cakes a week and 25 large cakes a week. It seems to be lucrative because the small cake is $18.95 and the large cake is $28.95. Costs are $6.45 per small cake and $9.40 per large cake. It will cost her $3,500 to purchase the equipment and insurance costs would rise by another $375 per month due to the hot equipment needed to make the cakes. What is your recommendation? Would it be profitable to sell the cakes?

Scenario Two: "What if" Analysis Your client would like to consider adding ice cream cakes to the list of items available for sale. She is wanting to offer cakes with customized cake, ice cream decorations. She thinks she can sell 20 small cakes a week and 25 large cakes a week. It seems to be lucrative because the small cake is $18.95 and the large cake is $28.95. Costs are $6.45 per small cake and $9.40 per large cake. It will cost her $3,500 to purchase the equipment and insurance costs would rise by another $375 per month due to the hot equipment needed to make the cakes. What is your recommendation? Would it be profitable to sell the cakes?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter1: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 15E: Ethical Behavior Consider the following scenario between Dave, a printer, and Steve, an assistant in...

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