QUESTION TWO (Topic 2a) 22 marks (IGNORE GST) Betty Buns is a student run hot fruit bun stand operating on a university campus, open ten months of the year. Fruit buns are bought partially pre-baked and then heated in the sales cart and sold. You are given the following figures pertaining to next year's budget: Expected annual sales - 73,000 buns at $0.70 each Staff salaries - $21,700 p.a. Monthly hire of cart $ 50. The cart is only hired in the months required. Cost of buying part-baked buns is $0.23 each. Monthly electricity costs $30. As the cart is heated all the time when in use this electricity cost is the same each day, regardless of sales. No electricity costs are incurred in the non- operational months. Fruit buns are given to customers in paper bags - one per bag- and bags cost $0.02 each. Required: 1. Calculate the variable costs per fruit bun (unit) (2 marks) 2. Calculate the contribution margin per fruit bun. (2 marks) 3. Calculate the annual fixed costs. (3 marks) 4. Calculate the annual number of fruit bun sales required to break even (round up to nearest bun, if required). (2 marks) 5. Calculate the expected annual profit or loss based on current estimates (5 marks) 6. Draw a Cost-Volume-Profit graph showing total revenue and total costs, fixed costs, profit and loss areas, and clearly showing the break-even point in units and dollar revenue similar to Exhibit 2.12 page 69 of the set text. (4 marks) 7. The university cafeteria has offered space to sell the fruit buns inside their buildings, using the cafeteria facilities to heat the rolls. If Betty Buns decides to take this option then they will be charged $1,000 per annum by the cafeteria. Betty Buns would no longer have to pay to hire the cart or pay for electricity, and the cafeteria will provide free paper bags for Betty Buns' customers should they wish to take the bread rolls away rather than eat in the cafeteria. Is it worthwhile, based on current expected figures, for Betty Buns to move operations into the university cafeteria? Show calculations to support your answer. (4 marks)