Gareth graduated from high school three years ago and enrolled into college to study entrepreneurship. Gareth received $100,000 from his great-grandfather's trust fund. He invested 80% of the fund into his business idea. Gareth prepares and sells food hampers to business and private events. Each food hamper requires materials with a cost of $280 and the main chef takes 15 hours to prepare one food hamper at a cost of $12.00 per hour. Each food hamper is packed in a special packaging material costing $2.50 each and sticker is engraved on the package (with Gareth's special motto) at an additional cost of $0.50 per package. Gareth sells one food hamper at a price of $783.00 each. Gareth pays workshop rentals
Gareth graduated from high school three years ago and enrolled into college to study entrepreneurship. Gareth received $100,000 from his great-grandfather's trust fund. He invested 80% of the fund into his business idea. Gareth prepares and sells food hampers to business and private events. Each food hamper requires materials with a cost of $280 and the main chef takes 15 hours to prepare one food hamper at a cost of $12.00 per hour. Each food hamper is packed in a special packaging material costing $2.50 each and sticker is engraved on the package (with Gareth's special motto) at an additional cost of $0.50 per package. Gareth sells one food hamper at a price of $783.00 each. Gareth pays workshop rentals of $8,205.00 and internet bill of $115.00 per period. Gareth project to sell thirty-nine (39) food hampers per period. Page 4 of 6 Required a) Compute the number of food hampers required to be sold to to breakeven. [6 marks] b) Calculate the margin of safety in percentage for Gareth' food hampers. [2 marks] c) Gareth is thinking of expanding his operations. He targets to make a profit of $13,120 in the following period. Advise him, how many food hampers he should sell to meet his target. [3 marks] d) Gareth's uncle advised him to make a research and identify the best option whether to buy and resale food hampers or continue making for himself. On average, one food hamper (ready for sale) costs $450 and transportation is $27.00 per hamper. With this option production costs will be eliminated. Calculate the breakeven point if Gareth takes this option. Advise Gareth on the best choice. [5 marks] e) The property owner where Gareth's warehouse is, has given Gareth an option to 18% of his revenue as an alternative of paying rent periodically. On assumption that there will be no change on the information original provided. To calculate the total food hampers Gareth is required to sell to correspond with 30% of revenue option, (covering all fixed costs) [3 marks] (You are to round your answer to the nearest 2 decimal places) Gareth graduated from high school three years ago and enrolled into college to study entrepreneurship. Gareth received $100,000 from his great-grandfather's trust fund. He invested 80% of the fund into his business idea. Gareth prepares and sells food hampers to business and private events. Each food hamper requires materials with a cost of $280 and the main chef takes 15 hours to prepare one food hamper at a cost of $12.00 per hour. Each food hamper is packed in a special packaging material costing $2.50 each and sticker is engraved on the package (with Gareth's special motto) at an additional cost of $0.50 per package. Gareth sells one food hamper at a price of $783.00 each. Gareth pays workshop rentals of $8,205.00 and internet bill of $115.00 per period. Gareth project to sell thirty-nine (39) food hampers per period. Page 4 of 6 Required a) Compute the number of food hampers required to be sold to to breakeven. [6 marks] b) Calculate the margin of safety in percentage for Gareth' food hampers. [2 marks] c) Gareth is thinking of expanding his operations. He targets to make a profit of $13,120 in the following period. Advise him, how many food hampers he should sell to meet his target. [3 marks] d) Gareth's uncle advised him to make a research and identify the best option whether to buy and resale food hampers or continue making for himself. On average, one food hamper (ready for sale) costs $450 and transportation is $27.00 per hamper. With this option production costs will be eliminated. Calculate the breakeven point if Gareth takes this option. Advise Gareth on the best choice. [5 marks] e) The property owner where Gareth's warehouse is, has given Gareth an option to 18% of his revenue as an alternative of paying rent periodically. On assumption that there will be no change on the information original provided. To calculate the total food hampers Gareth is required to sell to correspond with 30% of revenue option, (covering all fixed costs) [3 marks] (You are to round your answer to the nearest 2 decimal places)
