calculate the costs

chart

Costs Costs of goods sold were calculated using percentage markups on selling prices provided by Farmers Dairy and the owners of other large markets and bakeries. See Exhibit 5 . Other costs are estimated as follows: Number of Employees - the revenue per hour is calculated for each month. Assuming the average cash register transaction was $5.00 and each employee was expected to conduct 10 transactions per hour, the number of employees per day could be determined assuming each person worked 8 hours. Employee Wages - the cost of each employee, associated costs (uniforms, etc), and vacation pay was set at $7.00 per hour. Managers Wages - the wages paid to Alicia and Anna for the four months of the first year's day to day operations. They would pay themselves $500 per week for eight weeks each and each would be expected to be at the location all day, every day for the period for which they ran the operations during its start-up year. In all likelihood, next year's day to day operations would be handled by a senior employee who would be paid accordingly. Equity - each partner would be expected to contribute $5000. The remainder would come from the mortgage on the property and the building, and a demand loan to begin initial operations. Bank Loan - the bank loan monthly payment of $1300/ month was calculated on $100,000 for ten years at 10 percent. Demand Loan - interest would have to be paid on the demand loan until revenues were such that it could be paid out. The rate was expected to be 12 percent, a rate slightly higher than the mortgage. Only as much of the line of credit would be used as was necessary on a month to month basis. Promotion - the initial promotional for signs and local advertising was set at $5,000. On-going promotion in the local weekly newspaper was planned at 300/ month. Utilities - nominal figures for utilities (electricity, water, garbage removal, etc.) and other incidental expenses had to be included. It was noted that deli coolers, pop coolers, ice machines, and the cold storage room were a significant draw on electricity. They allocated $500/m month for this cost