Breakeven Analysis/Target Sales (Assignment #5)

Although business was off to a good start in January, Mary realized that she will need to be profitable in order to continue as a viable business. Mary discussed the subject of profitability with her accountant who suggested that she first needs to determine her breakeven point in both unit sales and dollars. He explains to her that even is the point where all cost are covered by sales and so, profit is equal to zero. He also suggested that the company should establish a monthly target profitability in order to determine the amount of cakes it would need to sell to achieve this level.

Since Mary did not know how to perform this calculation and in order to save money, she asked you to calculate the companys breakeven point and the target sales need to achieve a monthly profit of $500.

Required: Calculate M&J Bakery Incs breakeven point in both units and sales dollars. Also, calculate the sales needed in order to achieve a monthly profit of $500. Use the format in the Part 5 tab of the Excel template spreadsheet to prepare your answers.

Note: Use four decimal places in converting from total to per unit cost.

Standard per Cake tem and Ingredients Cost $6,000 (depreciated over 5 years on a SL basis. No salvage vakue) $0 (provided by the landlord) $0 (paid for by dad) $24 per 8 pounds bag $2 per dozen S15 per 25 pounds bag $6 per 14 pound boix $6.50 per 4 pounds $8 per 2 pounds Conventional oven Refigerator Baking pans, licenses Baking flour 1 pound 4 ety* 1 pound Sugar Baking Soda Butter Rasins 1 pound 1/2 pound Others (currants, diced date, Mitmeg. molasses) Cash register Rum (akohol) Utilities fincludes gas, electric and water) Mobile phone {business) Salary Keisha Salary - nieces Salary - aunt Accountant Estimated MOH $30 for all 4 boxes per month 12 per month (rental for 2 years) $12 per bottle 1/4 qtr of bottle per month per month per month $8 per hour $100 per month $100 per month $4 per cake 1 person 1.5 hours per cake Break Even Analysis Total Per Cake Sales Variable Expense Cont. Margin Fixed Expenses Operating Income 0 0 $0 $0 Cont. Margin Ratio: #DIV/0! Break Even ($) #DIV/0! Break Even (Cakes): #DIV/0! Target Sales (S) #DIV/O! = Target Sales (Cakes): #DIV/0! Standard per Cake tem and Ingredients Cost $6,000 (depreciated over 5 years on a SL basis. No salvage vakue) $0 (provided by the landlord) $0 (paid for by dad) $24 per 8 pounds bag $2 per dozen S15 per 25 pounds bag $6 per 14 pound boix $6.50 per 4 pounds $8 per 2 pounds Conventional oven Refigerator Baking pans, licenses Baking flour 1 pound 4 ety* 1 pound Sugar Baking Soda Butter Rasins 1 pound 1/2 pound Others (currants, diced date, Mitmeg. molasses) Cash register Rum (akohol) Utilities fincludes gas, electric and water) Mobile phone {business) Salary Keisha Salary - nieces Salary - aunt Accountant Estimated MOH $30 for all 4 boxes per month 12 per month (rental for 2 years) $12 per bottle 1/4 qtr of bottle per month per month per month $8 per hour $100 per month $100 per month $4 per cake 1 person 1.5 hours per cake Break Even Analysis Total Per Cake Sales Variable Expense Cont. Margin Fixed Expenses Operating Income 0 0 $0 $0 Cont. Margin Ratio: #DIV/0! Break Even ($) #DIV/0! Break Even (Cakes): #DIV/0! Target Sales (S) #DIV/O! = Target Sales (Cakes): #DIV/0