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Delicious Deserts, Incorporated

Income Statement For The Year Ending December $31,2012$

Revenues

Gross Sales. $q,$

Less: Sales Discounts $q,$

Less: Returns $($Cancelled Weddings$).q,$ $$275,000$

Net Sales. $q,$ $$270,500$

Cost of Goods Sold

Beginning Inventory $($January $1).q,$

Cost Of Ingredients To Bake Cakes. $q,$

Total Cost of Goods For Sale $q,$

Less: Ending Inventory December $31.q,$ $$18,000$

Cost of Goods Sold. $q,$ $$112,{500}_{?}$

Gross Profit. $q,$ $$158,000$

Operating Expenses

Selling Expenses $$109,500$ $$127,500$

$15,000$

$$2,500$

$$2,000$

$.$$$270,500$

Sales Commissions. $q,$

Advertising. $q,$ $$31,000$

Other Selling Expenses $($Internet$).$

$$16,000$

$q,$ $$18,000$

Total Selling Expenses. $q,$ $$65,000$

General and Administrative Expenses

Professional & Office Salaries. $q,.$$$20,500$

Utilities. $q,$ $$5,000$

Office Supplies. $q,$ $$1,500$

Bank Interest Paid on Loans. $q,.3,600$

Insurance $q,$ $$2,500$

Rent $($Fixed Cost$).q,$ $$,17,000$

Total General & Administrative Expense. $q,$ $$50,100$

Total Operating Expenses. $q,$ $$115,100$

Net Profit Before Taxes. $q,$

$42,900$

Less: Federal$/$State$/$Local Taxes. $q,.$$$10,725$

NET PROFIT. $q,$ S $32,175$

Question #$1$:

What was the Total Fixed Cost of running this business?

Free Answer:

The rent was the only fixed cost that Delicious Deserts had. They paid $$17,000$ per year or $$1,416\mathrm{.}66$ per month for rent. All other expenses were variable costs.

Question #$2$:

What was the Total Variable Cost of running this business?

Answer: $ $$259,825q,$

$$112,500-2,500$

$$115,100-2,000$

$-17,000-$$$4,500$

Clue:

Add up Cost of Goods Sold, Total Operating Expenses $($less Rent$),$ Income Tax Expense and $-$ $$10,725$ include the write$-$off losses from Sales Discounts & Wedding Cancellations.

Question #$3$:

Assuming that Delicious Deserts sold $150$ cakes during Q$1,300$ cakes during $Q2,450$ cakes during Q$3,$ and $475$ cakes during Q$4,$ what was the Total Revenue during each quarter assuming the prices were: $Q1-$ $$275$ per cake, $Q2-$ $$240$ per cake, $Q3-$$$180$ per cake and Q$4-$ $$170$ per cake?

Q$1-$ Total Revenue $=$$ $q,-150$$$275$

$Q2-$ Total Revenue $=$$ $q,-300$$$240$

Q$3-$ Total Revenue $=$$ $q,-4508180q,-475$$$170$

$4$