Question

We will use the following information to create the profit model. Based on the data in the tables below, create the profit model for Donuts to Go and Muffins to Go.

Profit = Total revenue X num. of units – Variable Expenses X num. of units – Fixed Expenses

(what are the values for Total Revenue, Variable Expenses and Fixed Expenses?)

Assume that each customer will buy one donut(or muffin) and one cup of coffee.

Come to class with both Profit Models written on a sheet of paper to hand in at the beginning of class. It will be part of your In-class activity grade for the day.

Donuts to Go

Time period

Revenue: Cup of Coffee

$4.00

Revenue: Donut

$3.50

Donut ingredients per donunt)

per donut

$0.60

paper products: napkins, plates etc

Insurance

month

$200.00

Maintenance & Repairs to equipment

month

$0.00

Marketing & Promotion: Advertising

month

$50.00

Coffee

per cup

$0.25

Coffee cups

per cup

$0.10

Payroll: Wages (Owner/ Manager)

month

$2,500.00

Payroll: Wages (per Employees)

month

$1,000.00

Donut and Coffee equipment rent

month

$500.00

Professional Fees: Accounting

month

$50.00

Professional Fees: Legal

month

$25.00

Powdered and Liquid Beverages

$0.00

Rent

month

$1,000.00

Previous research expense for Donuts advancements

$1,500.00

Supplies: Office

month

$25.00

Utilities

month

$200.00

Muffins to Go

Time period

Revenue: Cup of Coffee

$4.00

Revenue: Muffin

$5.50

Muffin ingredients (per muffin)

per donut

$1.20

paper products: napkins, plates etc

Insurance

month

$500.00

Maintenance & Repairs to equipment

month

$0.00

Marketing & Promotion: Advertising

month

$250.00

Coffee

per cup

$0.25

Coffee cups

per cup

$0.10

Payroll: Wages (Owner/ Manager)

month

$2,500.00

Payroll: Wages (per Employees)

month

$1,000.00

Muffin and Coffee equipment rent

month

$2,500.00

Professional Fees: Accounting

month

$50.00

Professional Fees: Legal

month

$25.00

Powdered and Liquid Beverages

$0.00

Rent

month

$2,000.00

Previous research expense for Muffin advancements

$2,000.00

Supplies: Office

month

$25.00

Utilities

month

$500.00

Answer 1

Let's Assume for the above we have 1500 customer Per Month for both the products.

I have compute Profit Model for Donuts and Muffins both by taking 1500 Customers reached to us.

Donuts
	Unit price	Unit	Total
Cup of Coffee	4.00	1,500	6,000
Donuts	3.50	1,500	5,250
Revenue			11,250
Donuts ingredient	0.60	1,500	900
Coffee	0.25	1,500	375
Coffee cups	0.10	1,500	150
Variable Cost			1,425
Gross Profit			9,825
Insurance			200
Maintenance & Repairs to equipment			-
Marketing & Promotion: Advertising			50
Payroll: Wages (Owner/ Manager)			2,500
Payroll: Wages (per Employees)			1,000
Donut and Coffee equipment rent			500
Professional Fees: Accounting			50
Professional Fees: Legal			25
Powdered and Liquid Beverages			-
Rent			1,000
Previous research expense for Donuts advancements			1,500
Supplies: Office			25
Utilities			200
Fixed Cost			7,050
Profit Before Tax			2,775

Muffins
	Unit price	Unit	Total
Cup of Coffee	4.00	1,500	6,000
Muffins	5.50	1,500	8,250
Revenue			14,250
Muffin ingredient	1.20	1,500	1,800
Coffee	0.25	1,500	375
Coffee cups	0.10	1,500	150
Variable Cost			2,325
Gross Profit			11,925
Insurance			500
Maintenance & Repairs to equipment			-
Marketing & Promotion: Advertising			250
Payroll: Wages (Owner/ Manager)			2,500
Payroll: Wages (per Employees)			1,000
Donut and Coffee equipment rent			2,500
Professional Fees: Accounting			50
Professional Fees: Legal			25
Powdered and Liquid Beverages			-
Rent			2,000
Previous research expense for Donuts advancements			2,000
Supplies: Office			25
Utilities			500
Fixed Cost			11,350
Profit Before Tax			575

After Comparing both Profit Models we can say its better to go for Donuts Business instead of Muffins.