Question

Select one:
A. £6,250
B. £13,750
C. £4,250
D. £1,750

Mrs Jolly always made the wedding cake for family and friends whenever the need arose. Feedback was always very positive and Mrs Jolly began to consider whether or not it would be worth setting up in business. To determine the viability of the project, she has gathered the following budgeted annual information Selling price per cake £100 Advertising and publicity £2,500 Ingredients per cake £40 Annual salary for an assistant £5,000 Decorations per cake In addition, she would need to invest f10,000 for a dedicated kitchen area in her house for the new venture. This would last her five years. If 250 wedding cakes were made in the year, what profit would be earned?

Answer 1

Solution: 100 40 45 Sale price Less : variable cost Ingredients Decoration CM per unit x units Total CM Less : Fixed cost Advertising Salary Depreciation=10000/5 Profit 250 13750 2500 5000 2000 9500 4250