Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Purchase Price per cake: $6 Selling price per cake $10 Your friend Ruby has been approached by his best friend Paulina and asked whether she

Purchase Price per cake: $6

Selling price per cake $10

Your friend Ruby has been approached by his best friend Paulina and asked whether she is interested in buying her Cake confectionery business-a medium scale business selling one very special cake here in Toronto, ON Canada imported from United States of America USA.

Here are the Operating costs:

Two shop staff salary : $4,500 per shop staff per month

Shop Office Rental: $6,000 per month

Other expenses (do not vary with Sales volume) $3,500 per month

Monthly Sales Volume: $12,000 cakes

Loyal customers

$700,000 in selling the business

Annual Profit: $140,000

Return on Investment: 21% per annum

Again, Ruby considers that the profit and the rate of returns are very attractive but she is weak in accounting. Help Ruby by solving the following questions:

  1. Calculate the contribution margin per unit of the cake
  2. Identify the fixed costs and find total fixed costs per unit
  3. Calculate profit earned in each month and annual profit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Plus

Authors: Robert Libby, Patricia Libby, Daniel Short

7th Edition

0077480015, 9780077480011

More Books

Students also viewed these Accounting questions

Question

1. Information that is currently accessible (recognition).

Answered: 1 week ago