Equipment: $50,000 but i purchased at 30% Discounted
Rent: $15,000 / month
Other Fixed cost include monthly salaries of 3 bakers: $6,000 / Month
Other Expenses: $2,000 / Month
Variable Unit costs to be about $1 and will be charging $3.50 per cupcake.
1. What is the Break- Even Point or How many cupcake must be sold to break even, given a time horizon of one year?
2. What is the break-even point if the time horizon is changed to two years?
3. Super Cupcake has now found special type of cupcake that they want to use in their product, which will change their cost per serving of cup cake by 10 cnets. They wish to offset this by increasing the price by 10 Cents as well. Now what is the breakeven point if the time horizon is still two years?
4. Now assume that you have to take into account the baking ability of your employees. Let's assume that one baker can bake up 35,000 servings of cup cake per year. Look at the Break Even Point in Question 1, do you have enough people to bake up this many servings? You only want to pay for just enough bakers that you will need. If you don't have the right amount of servers (too few or too many) adjust your fixed costs to account for the new number of baker (one baker costs $2,000 in monthly salaries) and tell me what is your new Break Even Point. Is this new Break Even Point supported by the number of baker you selected?