inal report to Tracy will be two fold. You are to write at least a one page paper to Tracy offering her your expertise on her expanding business. You have helped her determine the cost per cupcake, a budget, performed variance analysis, and looked at the return on investment if she is thinking of expanding her business. Your next task is to create a traditional income statement and a variable income statement for Tracy. She would like to know what her break
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Your final report to Tracy will be two fold. You are to write at least a one page paper to Tracy offering her your expertise on her expanding business. You have helped her determine the cost per cupcake, a
Your next task is to 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 |
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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