Question
Paul runs a small bakery in a suburban area, specializing in artisanal bread and pastries. He has been in business for three years and has
Paul runs a small bakery in a suburban area, specializing in artisanal bread and pastries. He has been in business for three years and has built a loyal customer base. His bread is priced at $6 per loaf, and pastries are priced between $2 and $4 each. The bakery has variable costs, including the cost of ingredients, packaging, and variable overhead, which amounts to 40% of revenues. There is a part-time employee who helps with baking and customer service and is paid $12 per hour. The bakery is open six days a week, and Paul works 10 hours a day on average.
On a typical day, the bakery serves between 60 and 100 customers, with an average of 80. Fixed costs include items such as rent, utilities, equipment maintenance, business licenses, and insurance. These costs total $20,000 per year. The operational year for the bakery is 300 days. Corporate income tax rates for small businesses are approximately 25% around that time.
If Paul wants to make a profit of $50,000 for the year (after tax), how many pastries must he sell each day at the bakery?
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