Maria Cupcakes

After her graduation, Maria decided to start her new Cupcakes Shop in a fast growing Area.

As a source of initial cost financing, she received a loan of 400KEGP at interest rate of 15%, to be paid over 4 years.

Fixed Costs per Month

Staff salaries: 25,000

Rental fees: 65,000

Expected demand and costs per Piece

Variable Costs (Expenses Only) per Unit: 3 EGP

Expected Average number of Sold Units/Day: 200 pieces (Expected Growth rate of 20% y/y).

Based on her pricing strategy, Maria set a price of 35 EGP/pc. Vanilla Cupcakes- Bill of Materials- Y1
Ingredient	Qty	Unit of Measure
Plain	25	G
Sugar	100	G
Eggs	1	Piece
Vanilla Extract	4	Teaspoon
Baking Powder	2	Teaspoon
Milk	50	G

Key Assumptions Year 1 Prices
Ingredient	Price	Unit of Measure	Currency
Plain	10	KG	EGP
Sugar	1	KG	USD
Large Eggs	2	Pc	EGP
Vanilla Extract	2	Teaspoon	EGP
Baking Powder	2	Teaspoon	EGP
Milk	11	KG	EGP

• 1USD:18EGP

Inflation Rate:25%

Working Days/year: 300 Days

Rental fees increasing by 5 % y/y (5 years contract )

Material prices increasing 10% y/y For Materials purchased in local Currency

Starting year 4, Maria is planning to have a new Recipe.

Vanilla Cupcakes- Bill of Materials- Y4
Ingredient	Qty	Unit of Measure
Plain	20	G
Sugar	100	G
large Eggs	1	Piece
Vanilla Extract	3	Teaspoon
Baking Powder	2	Teaspoon
Milk	50	G

In 40 mins, help Maria to assess the following;

CM % in Y1.

Required volume to Achieve 50,000 EGP Net in profit in year1.

Profit & Loss Statement for year 1 & year 5.

Identify Risk & opportunities For Maria Business