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Open a new Microsoft Excel document and rename its worksheet to “Profits”; This

ID: 2723026 • Letter: O

Question

Open a new Microsoft Excel document and rename its worksheet to “Profits”;

This worksheet must reflect the following fixed and variable costs for a hypothetical local muffin top store that has recently opened up and started operating:

Fixed Costs

USD per month

Building lease

2,182

Interest on loans

1,861

Utilities

924

Insurance

638

Property taxes

342

Maintenance

253

Variable Costs

USD per unit

Labor

0.84

Flour

0.33

Sugar

0.02

Milk

0.14

Eggs

0.12

Butter

0.21

Fillings

0.08

Baking powder

0.26

Calculate the store monthly total costs, revenues and profit given that the prevailing market price for an average muffin top is $3.5 and that the average monthly output is 9600 muffins.

Create two copies of “Profits” worksheet and name them “Breakeven1” and “Breakeven2”;

In “Breakeven1” worksheet use Excel’s Goal Seek feature to figure out how many muffin tops the store has to make during one month in order to break even provided that prevailing market price for an average muffin top is $2.5;

In “Breakeven2” worksheet use Excel’s Goal Seek feature to find out what prevailing market price for an average muffin top has to be in order for the store to break even provided that its maximum monthly output is only 5,000 units.

Fixed Costs

USD per month

Building lease

2,182

Interest on loans

1,861

Utilities

924

Insurance

638

Property taxes

342

Maintenance

253

Explanation / Answer

Total Variable cost = $2 / muffin top

Total Fixed cost = $6200 per month

“Breakeven1” = Total Fixed cost / Contribution = $6200 / $2.50 - $2 = 12400 muffin tops

“Breakeven2” = Total Fixed cost / Contribution = $6200 / Selling price - $2 = 5000 muffin tops (maximum)

=> 5000 (Selling Price) = 16200

=> Selling Price = 16200 / 5000 = $3.24 per muffin tops