Her niece, who was going to be her assistant, suggested that rather than be paid the annual salary, she would prefer a commission of 10 per cake. How many wedding cakes would now need to be sold to breakeven if commission was paid. What level of sales of wedding cakes produces a profit figure which is the same whether her niece is paid by salary or commission?

Mrs Jolly always made the wedding cake for family and friends whenever the need arose. Feedback was always very positive and Mrs Jolly began to consider whether or not it would be worth her while setting up in business. To determine the viability of the project, she has gathered the following budgeted annual information. Selling price per cake 100 Advertising and publicity 2,500 Ingredients per cake 40 Annual salary for an assistant 5,000 Decorations per cake In addition, she would need to invest 10,000 for a dedicated kitchen area in her house for the new venture. This would last her five years. 5