Question

Hot cross is a student who runs hot cross bun stand operating on a university campus, open ten months of the year. Fruit buns are bought partially pre-baked and then heated in the sales cart and sold. You are given the following figures pertaining to next year’s budget:

Expected annual sales – 73,000 buns at $0.70 each
Staff salaries - $21,700 p.a.
Monthly hire of cart $ 50. The cart is only hired in the months required.
Cost of buying part-baked buns is $0.23 each.
Monthly electricity costs $30. As the cart is heated all the time when in use this electricity cost is the same each day, regardless of sales. No electricity costs are incurred in the non- operational months.
Fruit buns are given to customers in paper bags – one per bag- and bags cost $0.02 each.

Draw a Cost-Volume-Profit graph showing total revenue and total costs, fixed costs, profit and loss areas, and clearly showing the break-even point in units and dollar revenue

Answer 1