Sales + Revenue
For the last six months, Wanda’s sales have broken down as shown below. She has also provided you with her cost for each variety of treat.
| Products/Services |
% of Sales |
Sales Price |
COGS |
Contribution |
Profit Margin |
Weighted Profit Margin |
| Party Pooch |
45% |
20.00 |
10.40 |
9.60 |
48.00% |
21.60% |
| Chicken Cuties |
18% |
15.00 |
7.80 |
7.20 |
48.00% |
8.64% |
| Bison Bites |
5% |
21.00 |
10.80 |
10.20 |
48.57% |
2.43% |
| Lamb Lovies |
32% |
24.00 |
12.60 |
11.40 |
47.50% |
15.20% |
| (Must equal 100%) |
100% |
|
Average profit margin |
47.87% |
|
Sales Price |
COGS |
| Chicken Cuties |
1.25 |
0.65 |
| Bison Bites |
1.75 |
0.90 |
| Lamb Lovies |
2.00 |
1.05 |
Cost of Goods Sold
Wanda’s COGS include the packaging, labeling, the ingredients, and the time it takes to make the treats. Since she can bake them in big batches, her labor cost per unit is very low.
When Wanda ships her products, she charges just what it costs her. Shipping is done on a cost recovery basis and currently she doesn’t consider it in her income/expenses.
Monthly Expenses
Currently Wanda’s monthly expenses are:
| Rent |
0.00 |
| Electricity |
0.00 |
| Telephone |
100.00 |
| Water/Sewer |
0.00 |
| Internet |
60.00 |
| Website |
175.00 |
| Salaries |
0.00 |
| Owner’s Draw |
1000.00 |
| Office Supplies |
50.00 |
| Loan Payment |
0.00 |
| Insurance |
85.00 |
| Other |
0.00 |
| Total Overhead |
$1,470.00 |
Sales Mix
Currently Wanda’s customers purchase her products at the following ratios:
| Products/Services |
% of Sales |
| Party Pooch |
45% |
| Chicken Cuties |
18% |
| Bison Bites |
5% |
| Lamb Lovies |
32% |
|
100% |
Break Even Calculation
Based on her current monthly expenses and sales mix, this is what Wanda has to sell in order to break-even:
| Products/Services |
Sales |
Price |
COGS |
Contribution |
Profit Margin |
Weighted Profit Margin |
| Party Pooch |
45% |
20.00 |
10.40 |
9.60 |
48.00% |
21.60% |
| Chicken Cuties |
18% |
15.00 |
7.80 |
7.20 |
48.00% |
8.64% |
| Bison Bites |
5% |
21.00 |
10.80 |
10.20 |
48.57% |
2.43% |
| Lamb Lovies |
32% |
24.00 |
12.60 |
11.40 |
47.50% |
15.20% |
| (Must equal 100%) |
100% |
|
Average profit margin: |
47.87% |
|
Total Overhead |
$1,470.00 |
| divided by |
Average Profit Margin |
47.87% |
|
= BREAKEVEN |
$3,070.91 |
Average Sales per customer is $20.00
|
BREAKEVEN |
Party Pooch |
Chicken Cuties |
Bison Bites |
Lamb Lovies |
| Monthly In Dollars |
$3,070.91 |
$1,381.91 |
$552.76 |
$153.55 |
$982.69 |
| In Units |
|
69 |
37 |
7 |
41 |
Forecasting Supply and Demand
Wanda is at capacity for production out of her kitchen, so she believes that she is at the maximum income she can generate with her current structure. If Wanda changes her pricing structure, the following quantities demanded and quantities supplied will result.
| Chicken Cuties |
|
Chicken Cuties |
|
Chicken Cuties |
| Price ($) |
Demand (Q) |
|
Price($) |
Supply (Q) |
|
Price ($) |
Demand (Q) |
Supply (Q) |
| $0.75 |
1000 |
|
$0.75 |
500 |
|
$0.75 |
1000 |
500 |
| $1.00 |
900 |
|
$1.00 |
650 |
|
$1.00 |
900 |
650 |
| $1.25 |
800 |
|
$1.25 |
800 |
|
$1.25 |
800 |
800 |
| $1.75 |
700 |
|
$1.50 |
1000 |
|
$1.50 |
700 |
1000 |
| $2.00 |
600 |
|
$1.75 |
1400 |
|
$1.75 |
600 |
1400 |
| $2.25 |
500 |
|
$2.00 |
1500 |
|
$2.00 |
500 |
1500 |
| Bison Bites |
|
Bison Bites |
|
Bison Bites |
| Price ($) |
Demand (Q) |
|
Price($) |
Supply (Q) |
|
Price ($) |
Demand (Q) |
Supply (Q) |
| $1.00 |
1200 |
|
$1.00 |
500 |
|
$1.00 |
1200 |
500 |
| $1.25 |
1100 |
|
$1.25 |
600 |
|
$1.25 |
1100 |
600 |
| $1.50 |
900 |
|
$1.50 |
700 |
|
$1.50 |
900 |
700 |
| $1.75 |
800 |
|
$1.75 |
900 |
|
$1.75 |
800 |
900 |
| $2.00 |
700 |
|
$2.00 |
1000 |
|
$2.00 |
700 |
1000 |
| $2.25 |
400 |
|
$2.25 |
1400 |
|
$2.25 |
400 |
1400 |
| Lamb Lovies |
|
Lamb Lovies |
|
Lamb Lovies |
| Price ($) |
Demand (Q) |
|
Price($) |
Supply (Q) |
|
Price ($) |
Demand (Q) |
Supply (Q) |
| $1.75 |
1500 |
|
$1.75 |
800 |
|
$1.75 |
1500 |
800 |
| $2.00 |
1400 |
|
$2.00 |
900 |
|
$2.00 |
1400 |
900 |
| $2.25 |
1200 |
|
$2.25 |
1000 |
|
$2.25 |
1200 |
1000 |
| $2.50 |
1000 |
|
$2.50 |
1200 |
|
$2.50 |
1000 |
1200 |
| $2.75 |
800 |
|
$2.75 |
1400 |
|
$2.75 |
800 |
1400 |
| $3.00 |
700 |
|
$3.00 |
1600 |
|
$3.00 |
700 |
1600 |
| Party Pooch |
|
Party Pooch |
|
Party Pooch |
| Price ($) |
Demand (Q) |
|
Price($) |
Supply (Q) |
|
Price ($) |
Demand (Q) |
Supply (Q) |
| $16.00 |
1400 |
|
$16.00 |
600 |
|
$16.00 |
1400 |
600 |
| $18.00 |
1200 |
|
$18.00 |
700 |
|
$18.00 |
1200 |
700 |
| $20.00 |
1100 |
|
$20.00 |
800 |
|
$20.00 |
1100 |
800 |
| $22.00 |
1000 |
|
$22.00 |
1000 |
|
$22.00 |
1000 |
1000 |
| $24.00 |
900 |
|
$24.00 |
1200 |
|
$24.00 |
900 |
1200 |
| $26.00 |
800 |
|
$26.00 |
1400 |
|
$26.00 |
800 |
1400 |
Income Information
Here is a summary of Wanda’s Salty Pawz income information for the past 6 months.
| INCOME: |
|
|
| Party Pooch |
|
$ 40,500.00 |
| Chicken Cuties |
|
$ 16,200.00 |
| Bison Bites |
|
$ 4,515.00 |
| Lamb Lovies |
|
$ 28,800.00 |
| TOTAL INCOME: |
|
$ 90,015.00 |
|
|
|
| COST OF GOODS SOLD: |
|
|
| Party Pooch |
|
$ 21,060.00 |
| Chicken Cuties |
|
$ 8,424.00 |
| Bison Bites |
|
$ 4,515.00 |
| Canine Craving |
|
$ 15,120.00 |
| Total cost of sales |
|
$ 49,119.00 |
| GROSS PROFIT |
|
$ 40,896.00 |
|
|
|
| OPERATING EXPENSES: |
|
|
| Rent |
|
$ – |
| Electricity |
|
$ – |
| Telephone |
|
$ 600.00 |
| Water /Sewer |
|
$ – |
| Internet |
|
$ 360.00 |
| Website |
|
$ 1,050.00 |
| Salaries |
|
$ – |
| Owner’s Draw |
|
$ 6,000.00 |
| Office Supplies |
|
$ 300.00 |
| Loan Payment |
|
$ – |
| Insurance |
|
$ 510.00 |
| Other |
|
$ – |
| TOTAL EXPENSES |
|
$ 8,820.00 |
|
|
|
| NET INCOME |
|
|
| BEFORE TAXES |
|
$ 32,076.00 |
