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Business Description A friend, Jay Green, recently opened a cupcake store to sell gourmet cupcakes. Jay has asked you for help with formulating the projected numbers for the business and help analyze if the company will be successful. Using the skills you have developed, you will analyze the business to provide a forecast and recommendations for the business venture. Jay opened the business on January 1, 2020 and has provided the financial information for the year ended December 31, 2020. Provide answers to the required items based on the information provided below and other amounts calculated. Be sure to show your calculations. Cost information: Jay purchases his cupcakes from a baker for $10.20 per dozen cupcakes. Costs for packaging the cupcakes (bags and boxes) average 2 cents (.02) per cupcake. Jay has a location near downtown that is rented for $600 per month. Utilities average $110 per month. Fixtures for the business were purchased for $8,000 (depreciation will be $800 per year for 10 years) Jay is open 7 days per week from 10:00 AM until 6:00 PM. The store is operated by one employee at a time. The employees are paid $10.50 per hour. Business insurance has been obtained at a cost of $660 per year. Jay plans on spending $500 per month for advertising. The financial statements prepared by Jay for the year ended December 31, 2020 are attached. 5. If the selling price is $3.25 per cupcake, what is the contribution margin per cupcake and contribution margin ratio 6. At a selling price of $3.25 per cupcake, how many cupcakes need to be sold in order to break- even? What is the break-even in sales dollars? Based on a selling price of $3.25 prepare a cost/volume/profit graph

Business Description A friend, Jay Green, recently opened a cupcake store to sell gourmet cupcakes. Jay has asked you for help with formulating the projected numbers for the business and help analyze if the company will be successful. Using the skills you have developed, you will analyze the business to provide a forecast and recommendations for the business venture. Jay opened the business on January 1, 2020 and has provided the financial information for the year ended December 31, 2020. Provide answers to the required items based on the information provided below and other amounts calculated. Be sure to show your calculations. Cost information: Jay purchases his cupcakes from a baker for $10.20 per dozen cupcakes. Costs for packaging the cupcakes (bags and boxes) average 2 cents (.02) per cupcake. Jay has a location near downtown that is rented for $600 per month. Utilities average $110 per month. Fixtures for the business were purchased for $8,000 (depreciation will be $800 per year for 10 years) Jay is open 7 days per week from 10:00 AM until 6:00 PM. The store is operated by one employee at a time. The employees are paid $10.50 per hour. Business insurance has been obtained at a cost of $660 per year. Jay plans on spending $500 per month for advertising. The financial statements prepared by Jay for the year ended December 31, 2020 are attached. 5. If the selling price is $3.25 per cupcake, what is the contribution margin per cupcake and contribution margin ratio 6. At a selling price of $3.25 per cupcake, how many cupcakes need to be sold in order to break- even? What is the break-even in sales dollars? Based on a selling price of $3.25 prepare a cost/volume/profit graph

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Business Description A friend, Jay Green, recently opened a cupcake store to sell gourmet cupcakes. Jay has asked you for help with formulating the projected numbers for the business and help analyze if the company will be successful. Using the skills you have developed, you will analyze the business to provide a forecast and recommendations for the business venture. Jay opened the business on January 1, 2020 and has provided the financial information for the year ended December 31, 2020. Provide answers to the required items based on the information provided below and other amounts calculated. Be sure to show your calculations. Cost information: Jay purchases his cupcakes from a baker for $10.20 per dozen cupcakes. Costs for packaging the cupcakes (bags and boxes) average 2 cents (.02) per cupcake. • Jay has a location near downtown that is rented for $600 per month. Utilities average $110 per month. Fixtures for the business were purchased for $8,000 (depreciation will be $800 per year for 10 years) Jay is open 7 days per week from 10:00 AM until 6:00 PM. The store is operated by one employee at a time. The employees are paid $10.50 per hour. Business insurance has been obtained at a cost of $660 per year. Jay plans on spending $500 per month for advertising. The financial statements prepared by Jay for the year ended December 31, 2020 are attached. 5. If the selling price is $3.25 per cupcake, what is the contribution margin per cupcake and contribution margin ratio 6. At a selling price of $3.25 per cupcake, how many cupcakes need to be sold in order to break- even? What is the break-even in sales dollars? Based on a selling price of $3.25 prepare a cost/volume/profit graph
Transcribed Image Text:Business Description A friend, Jay Green, recently opened a cupcake store to sell gourmet cupcakes. Jay has asked you for help with formulating the projected numbers for the business and help analyze if the company will be successful. Using the skills you have developed, you will analyze the business to provide a forecast and recommendations for the business venture. Jay opened the business on January 1, 2020 and has provided the financial information for the year ended December 31, 2020. Provide answers to the required items based on the information provided below and other amounts calculated. Be sure to show your calculations. Cost information: Jay purchases his cupcakes from a baker for $10.20 per dozen cupcakes. Costs for packaging the cupcakes (bags and boxes) average 2 cents (.02) per cupcake. • Jay has a location near downtown that is rented for $600 per month. Utilities average $110 per month. Fixtures for the business were purchased for $8,000 (depreciation will be $800 per year for 10 years) Jay is open 7 days per week from 10:00 AM until 6:00 PM. The store is operated by one employee at a time. The employees are paid $10.50 per hour. Business insurance has been obtained at a cost of $660 per year. Jay plans on spending $500 per month for advertising. The financial statements prepared by Jay for the year ended December 31, 2020 are attached. 5. If the selling price is $3.25 per cupcake, what is the contribution margin per cupcake and contribution margin ratio 6. At a selling price of $3.25 per cupcake, how many cupcakes need to be sold in order to break- even? What is the break-even in sales dollars? Based on a selling price of $3.25 prepare a cost/volume/profit graph
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