Question
Gourmet Bakery specializes in custom cakes. The bakery anticipates annual sales of 1,500 cakes. They have invested $1,500,000 in their facilities and aim for an
Gourmet Bakery specializes in custom cakes. The bakery anticipates annual sales of 1,500 cakes. They have invested $1,500,000 in their facilities and aim for an ROI of 20%. The budgeted costs for the coming year are as follows:
| Cost Item | Per Cake ($) | Total ($) |
|---|---|---|
| Direct Materials (Ingredients) | 25 | 37,500 |
| Direct Labor (Bakers) | 35 | 52,500 |
| Variable Overhead | 10 | 15,000 |
| Fixed Overhead | - | 150,000 |
| Variable Selling & Admin Expenses | 5 | 7,500 |
| Fixed Selling & Admin Expenses | - | 75,000 |
Required:
- Compute the total cost per cake.
- Determine the desired ROI per cake.
- Calculate the target price per cake.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
2nd Edition
0078110823, 9780078110825
