Question
In: Finance
We will use the following information to create the profit model. Based on the data in...
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
Solutions
Expert Solution
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.
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