Question
Creative Cakes offers custom cake services. The bakery anticipates 2,000 cakes annually. They have invested $800,000 in their facilities and expect an ROI of 18%.
Creative Cakes offers custom cake services. The bakery anticipates 2,000 cakes annually. They have invested $800,000 in their facilities and expect an ROI of 18%. The budgeted costs for the coming year are shown below:
| Cost Item | Per Cake ($) | Total ($) |
|---|---|---|
| Direct Materials (Ingredients) | 20 | 40,000 |
| Direct Labor (Bakers) | 30 | 60,000 |
| Variable Overhead | 5 | 10,000 |
| Fixed Overhead | - | 180,000 |
| Variable Selling & Admin Expenses | 2 | 4,000 |
| Fixed Selling & Admin Expenses | - | 36,000 |
Required:
- Calculate the total cost per cake.
- Determine the desired ROI per cake.
- Compute the target price per cake.
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Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
2nd Edition
0078110823, 9780078110825
