Question

A friend who has not majored in STEM or Business has struggled to find their footing in life. You are excited and proud to hear that they will be opening a Cupcake shop in a newly revitalized part of Atlanta called “Cupcakes ‘N’ Coffee”. They have come to you to try and figure out if their new venture will be successful based on the assumptions that they have. Your friend tells you that they will be selling cupcakes, coffee, and wine, and food entrees. They tell you that they have spent many hours studying other similar businesses in the area. They realized there are times when there are high demand expectations and low demand expectations. From what they have seen high demand times are Friday, Saturday, and Monday’s and they believe the expected distribution of sales will be 50% cupcakes, 25% coffee, 10% wine, and 15% food. On low demand days they think the expected distribution will be 40% cupcakes, 30% coffee, 10% wine, and 20% food. Cupcakes sell for $5 each, coffee is $2 a cup, a glass of wine is $7 , and an entree of food will be $10. The unit costs to make each cupcake is $1, a cup of coffee is $0.25 , a glass of wine is $2, and food entrees have a unit cost of $5 each. From what they have seen on high demand days they believe they will sell 150 total units of items and on low demand days 50 total units of items, respectively. The monthly rent is $1000, utilities vary but are expected to average $10 a day, the internet will be $50 a month, and employee labor is expected to average $100 a day. Lastly, ( but not least!) your time is money and besides you have faith that your friend’s business will be a success, in order to help your friend with these calculations you charge them $250 a week in store credit for the life of the business which is cash convertible at any time. Additional assumptions include that the business is open all 7 days and that one month can be considered 4 weeks or 28 days. Your friend asks you to setup the basic revenue model for them and let them know the following:

1. Weekly Expected Revenue (15 points)
2. Weekly Expected Costs (15 points)
3. Weekly ExpectedProfits (15 points)

Answer 1

a expected Revenue acost and profit for briday Saturday. and monday is calculated below: Distribution of sale % % of sale cost ($) Revenue ($) Cup cakes 10.5 75 75X81-75 75X85-375 coffee 10.25 375 37.5X80.25-9.375 37.5 X$2=75 Wine 6.10 15 158 $2230 150$7=105 food 10.15 22. 522.5X$5=112.5 22.5X$10=225 150 226.875 L 780. Total sale 150 (mits in above mentioned days (6) expected Revenue, cost and protit Tuesday, wednesday Thursday and sunday is calculated belowin Total sale sochits in above mentioned days. pistribution atsal % 7. ot Sale Cost ($) s Revenue cup cakes 040 20 20x81 - 20 20x85=100 coffee 10.30 15 18X80.25-3.75 15X$2 = 3 0 wine 10.105 5X827 10 5 X$7 = 35 food 10.2010 10x45-so ox$10= 100 T so I 83.75 T 265

@ Weekly ne venue = $780 x3 days (Friday Saturday and monday] + $265% 4 days (Tuesday, Wedenday, Thursday and sunday) = $ 224 0 751060 = $ 3400 Weekly Revenue = 83400 Weel cost a $ 226.875 X 3 days (Friday saturday and monday). $83.75 X4 days (Tuesday, xyednesday Thursday and sunday + $10,00 (monthly Rent) + $10x7daus. Week + $50 & wee Internets of $1008 7 days +$250= = $ 680.625 +$335+$2500+$70+ $12.5+ +$250 & $2298.1257 700 @ profit - Weekly Revenue - vveckly cost weekly prohit. $3400 - $2298.125 $1101.875