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. Jay opened the business on January 1, 2019 and has provided the financial information for the year ended December 31, 2019. show your calculations(for reference). 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 $700 per month. Utilities average $125 per month. Fixtures for the business were purchased for $10,000 (depreciation will be $1,000 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 $780 per year. Jay plans on spending $750 per month for advertising. The financial statements prepared by Jay for the year ended December 31, 2019 are attached.

Using separate tabs in a spreadsheet,

1 Develop the annual cost formula in Y = a + bX format, i.e. Total Costs = Fixed Costs + (Variable Cost per Unit times number of units). (Provide just the equation for calculating the total costs for different quantities

2 Jay is currently selling the cupcakes for $3.25 each. Determine if Jay's selling price is appropriate by researching what the target price should be. Research who the competition is and at what price they are selling gourmet cupcakes (this will provide a base for a target price). Provide the detailed information for at least 3 competitors. Based on the target price developed, a projection of selling 24,000 cupcakes with an expectation of a 14% profit, what is the maximum cost allowable for all expenses?

3 Develop a price using cost-based pricing assuming that Jay expects to sell 24,000 cupcakes a year and would like to have a 14% profit.

4 If the selling price is $3.25 per cupcake, what is the contribution margin per cupcake and contribution margin ratio .

5 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?

6 Based on a selling price of $3.25 prepare cost/volume/profit graph (Hint: this is explained in Module 16. Also, here is link to a video that explains how to create the graph on Excel: https://www.youtube.com/watch?v=aE0D5FUgxyM) .

7 Prepare cash budget for the company's first year of operations based on sales of 24,000 cupcakes at a price of $3.25 per cupcake. The budget should be prepared on a quarterly basis. Assume all sales are cash sales and that all costs and expenses are paid in cash. Rent, insurance, and advertising costs will be paid on a monthly basis. A minimum cash balance of $2,500 should be maintained

8 Prepare the company's forecasted income statement for the year ended December 31, 2020 based on the sale of 24,000 cupcakes at $3.25 per cupcake (Modules 2 and 22) (15 points).

9 Prepare forecasted balance sheet as of December 31, 2020 based on the sale of 24,000 cupcakes at $3.25 per cupcake

10 Prepare forecasted statement of cash flows for the year ended December 31, 2020 based on the sale of 24,000 cupcakes at $3.25 per cupcake