create a traditional income statement and a variable income statement for Tracy. She would like to know what her breakeven point in units and sales dollars currently are. She would also like to know what amount of sales are required to achieve a target profit of $40,000 and also the units to sell to meet that target profit. # of Cupcakes 110,000 Price Per Cake $2.28 Raw materials Variable $42,244 All are purchased as needed to avoid spoilage and to have the freshest ingredients DM $0.38 Bakery wages Variable $58,000 They do all of the baking DL $0.53 Supervisor’s salary Fixed $35,000 Supervisor does not do any baking, but supervises the bakers VFO $0.17 Office personnel Fixed $26,000 Office personnel do not do any baking FFO $0.40 Tracy’s salary Fixed $42,000 She considers herself CEO Cost per cupcake $1.48 Salesman's salary Variable $23,500 He is paid based on number of cupcakes sold to special events Supplies Variable $5,000 All used in the bakery Factory Overhead Period Costs Utilities (electric) Variable $6,500 75% is for the bakery and 25% is for the administrative office Supervisor’s salary $35,000 Office personnel $26,000 Utilities (Gas) for ovens Variable $5,250 All for bakery Supplies $5,000 Tracy’s salary $42,000 Water Variable $3,800 All for bakery Utilities (electric) $4,875 Salesman's salary $23,500 Repairs and maintenance Fixed $4,700 All for bakery Utilities (Gas) for ovens $5,250 Utilities (electric) $1,625 Rent expense Fixed $6,000 75% is for the bakery and 25% is for the administrative office Water $3,800 Rent expense $1,500 Telephone and internet Fixed $4,000 All for administrative office Repairs and maintenance $4,700 Telephone and internet $4,000 Total $261,994 Rent expense $4,500 Total $98,625 Total $63,125

create a traditional income statement and a variable income statement for Tracy. She would like to know what her breakeven point in units and sales dollars currently are. She would also like to know what amount of sales are required to achieve a target profit of $40,000 and also the units to sell to meet that target profit. # of Cupcakes 110,000 Price Per Cake $2.28 Raw materials Variable $42,244 All are purchased as needed to avoid spoilage and to have the freshest ingredients DM $0.38 Bakery wages Variable $58,000 They do all of the baking DL $0.53 Supervisor’s salary Fixed $35,000 Supervisor does not do any baking, but supervises the bakers VFO $0.17 Office personnel Fixed $26,000 Office personnel do not do any baking FFO $0.40 Tracy’s salary Fixed $42,000 She considers herself CEO Cost per cupcake $1.48 Salesman's salary Variable $23,500 He is paid based on number of cupcakes sold to special events Supplies Variable $5,000 All used in the bakery Factory Overhead Period Costs Utilities (electric) Variable $6,500 75% is for the bakery and 25% is for the administrative office Supervisor’s salary $35,000 Office personnel $26,000 Utilities (Gas) for ovens Variable $5,250 All for bakery Supplies $5,000 Tracy’s salary $42,000 Water Variable $3,800 All for bakery Utilities (electric) $4,875 Salesman's salary $23,500 Repairs and maintenance Fixed $4,700 All for bakery Utilities (Gas) for ovens $5,250 Utilities (electric) $1,625 Rent expense Fixed $6,000 75% is for the bakery and 25% is for the administrative office Water $3,800 Rent expense $1,500 Telephone and internet Fixed $4,000 All for administrative office Repairs and maintenance $4,700 Telephone and internet $4,000 Total $261,994 Rent expense $4,500 Total $98,625 Total $63,125

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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Question

		# of Cupcakes	110,000
		Price Per Cake	$2.28
Raw materials	Variable	$42,244	All are purchased as needed to avoid spoilage and to have the freshest ingredients	DM	$0.38
Bakery wages	Variable	$58,000	They do all of the baking	DL	$0.53
Supervisor’s salary	Fixed	$35,000	Supervisor does not do any baking, but supervises the bakers	VFO	$0.17
Office personnel	Fixed	$26,000	Office personnel do not do any baking	FFO	$0.40
Tracy’s salary	Fixed	$42,000	She considers herself CEO	Cost per cupcake	$1.48
Salesman's salary	Variable	$23,500	He is paid based on number of cupcakes sold to special events
Supplies	Variable	$5,000	All used in the bakery	Factory Overhead		Period Costs
Utilities (electric)	Variable	$6,500	75% is for the bakery and 25% is for the administrative office	Supervisor’s salary	$35,000		Office personnel	$26,000
Utilities (Gas) for ovens	Variable	$5,250	All for bakery	Supplies	$5,000		Tracy’s salary	$42,000
Water	Variable	$3,800	All for bakery	Utilities (electric)	$4,875		Salesman's salary	$23,500
Repairs and maintenance	Fixed	$4,700	All for bakery	Utilities (Gas) for ovens	$5,250		Utilities (electric)	$1,625
Rent expense	Fixed	$6,000	75% is for the bakery and 25% is for the administrative office	Water	$3,800		Rent expense	$1,500
Telephone and internet	Fixed	$4,000	All for administrative office	Repairs and maintenance	$4,700		Telephone and internet	$4,000
	Total	$261,994		Rent expense	$4,500		Total	$98,625
				Total	$63,125

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