PROBLEM 1
The owner of the Red Mill Inn reviews gift shop sales on a monthly basis. Over the years,
certain items have been dropped from the shop because their sales provided insufficient
profit relative to the other gift shop items. Information for the past six months on three gift
shop items is in the table below.
		BAG OF	SWEET	STICKY
		MUFFINS	BREAD	BUNS
Sales		$2,160.00	$540.00	$2,880.00
Variable costs		$1,170.00	$256.50	$1,260.00
Contribution Margin		$990.00	$283.50	$1,620.00
Fixed costs		$480.00	$350.00	$600.00
Net Income		$510.00	($66.50)	$1,020.00

Question

25% of the fixed costs of each item are avoidable; the other 75% are not. Show calculations

to determine if Sweet Bread is profitable or not.