El Charro Food Truck is a Mexican Food Truck that specializes in Mexican Street Food. The owner is considering introducing a poplar Mexican street food item, Elotes. Elotes is Spicy Grilled Mexican Street Corn and they are considering it because a lot of people have been asking for it. They decided to sell a family size Elotes bowl. Before they introduce their Elotes, they want to run some numbers to make sure it will be a good financial decision. As such, they asked you to help them with their numbers. Here are numbers they need help with.

Owners Salary: $5,000 Corn on the Cob: $2 Utilities: $1000 Cilantro: $0.40 Food Truck Rental: $4,000 Equipment: $5,000 Mayonnaise: $1.60 secret ingredient: $3.00 wages paid per Elotes: $3.00

El Charros has decided to use Connecticut as a test market and the average price of a large gourmet Elotes in Connecticut is $31.25. There are also 1 million Elotes sold in Connecticut. El Charros decides to sell this new Elotes for 80% of the average price of a Elotes sold in Connecticut. They also project that they will be able to sell the equivalent of 1% of the Elotes sold in Connecticut.

Use the numbers provided above to answer questions below. Make sure that you show all formulas and also show all your calculations since there will be points awarded for the formula and calculations. Formulas are attached to the back of this test.

The company wants you to calculate (20 points):

How many Elotes they need to sell to break even.

The value (in dollars) of the number of Elotes they need to sell to break even.

What proportion of market share will they be capturing if all they do is sell enough Elotes to break even?

The company needs to know how much profit they will make. Using their projections of what they think they can sell, calculate their profits using the profit equation. (20 points)

Create a Proforma Income Statement using the information provided in the pages above. The Cost of Goods Sold in this scenario is equal to the Total Variable Cost. Focus on the quantities sold that are associated with the Profit equation calculation in question 2. Not the break even quantities. (20 points)

A sales person from El Charros approached Walmart and asked them to sell the Elotes in their retail stores. El Charros offered to sell a Elotes to Walmart for $20 dollars and Walmart will sell the Elotes in their stores for $25. If Walmart agrees to El Charross terms: (20 points)

What will El Charross trade margin be?

What will El Charross trade margin % be?

What will Walmarts trade margin be?

What will Walmarts trade margin % be?

El Charros decided that they wanted to change their margin percent to 55%. How much should they sell their Elotes to Walmart? (10 points)

If El Charros receives 55% margins for each Elotes, and Walmart still sells the Elotes for $25, what will Walmarts new trade margin % be? (10 points)