Three university friends decided to operate a small on-line business producing and selling healthy baked goods. They were able to secure their domain name www.floralbakes for a charge of $300.00. They decided that they will each earn a $25,000 annual income until the business break-even. Advertising and promotion costs were estimated at $4,000 for the year. They decided that the

Sep 8, 2023

Three university friends decided to operate a small on-line business producing and selling healthy baked goods. They were able to secure their domain name “www.floralbakes” for a charge of $300.00. They decided that they will each earn a $25,000 annual income until the business break-even. Advertising and promotion costs were estimated at $4,000 for the year. They decided that the selling price for their baked goods averaged $12.00, and their best estimate of required sales to break even was 8,000 units.

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Three university friends decided to operate a small on-line business producing and selling healthy baked goods. They were able to secure their domain name www.floralbakes for a charge of $300.00. They decided that they will each earn a $25,000 annual income until the business break-even. Advertising and promotion costs were estimated at $4,000 for the year. They decided that the
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What was the variable cost per unit?    
Name three variable costs that they will definitely incur.    

What was the contribution margin per unit?  What was the total contribution margin?  
 
What was the margin as a percentage of the sales?  
 
What was the margin as a percentage of the cost?

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