Answer to Question #166306 in Accounting for Joe

Question

You have just opened a bakery selling high-end muffins and would like to make $50,000 per year. :

You sell muffins in boxes of a dozen but you price each muffin at $3.00. Each muffin costs $0.30 in ingredients plus a 5¢ paper cup. Each shipping box costs $1.20.

Rent on the bakery is $2,000 per month and utilities are estimated at $700 each month. In addition, there is an annual health inspection fee which last year was $220.

a)  With respect to the number of boxes of muffins, what kind of cost is the health inspection fee?

 

b)  What is your contribution margin on each box of yummy tasty muffins?

 

c)  How many boxes of muffins must you sell to reach your target profit?

Answer 1

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