Cake Empire Analysis

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timer Asked: Mar 3rd, 2019
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Question Description

Review your Project Submission from Module 02 ****ATTACHED*** where you developed a cost card for your cookie and made a list of potential overhead costs.
Create an Excel spreadsheet as outlined below. Be sure that your completed spreadsheet has answers to all the questions below.

  1. In a table, on the first tab of the spreadsheet, classify your costs as variable, fixed, or mixed. Note: Now that you have a more robust understanding of costs you may need to add some overhead costs to your list. Think about both the ecommerce costs as well as the production facility costs.
  2. On the second tab of your Excel spreadsheet, prepare a high-low analysis of your electric costs using the following data. What is your fixed cost of electricity? What is the variable cost of electricity?
Month
Kilowatt Hours Used
Electric Costs
January
1866
$230
February
1439
$202
March
1146
$197
April
1046
$190
May
996
$182
June
1760
$225
  1. On the third tab of your spreadsheet prepare a daily contribution margin income statement based on your cost card from Module 01. Note: You must make some realistic assumptions about your fixed costs, sales level, and selling and administrative costs. Be sure to list all your assumptions. What is the contribution margin ratio for your cookie?
  2. On the fourth tab of your spreadsheet, calculate the break-even in number of cookies per day. What is the break-even in sales dollars each day? How many cookies must you sell to earn a daily profit of $100? Does this seem realistic? 

Unformatted Attachment Preview

 This paper seeks to form a cake company based on these objectives. i. Establishing a location and name for the company. ii. Setting tactical and operating criteria for the company. iii. Setting cake specifications iv. Deciding on a cake recipe v. Establishing an accounting system for the cost of each cake. Cake Empire  Cake Empire will major in providing pocket friendly healthy cakes that meet the ‘conscious consumer’s’ expectations.  Cakes will be delivered in the New York area only upon placing an order.  The company seeks to take advantage of today’s conscious consumer who is aware of eating healthy at a pocket friendly price. Cake Empire will be to focus on the market niche of lacking healthy cakes for consumers with preexisting medical conditions like diabetes, kids and consumers who just want to keep healthy.  Cake Empire seeks to provide pocket friendly, healthy cakes to all New Yorkers.  The target market and selling strategy  Cake Empire’s main target market will be the cake loving residents of New York especially those with preexisting health conditions and ceremony organizers.  The company’s selling strategy will be through its storefronts and also through e-commerce by creating online pages in social media sites such as Facebook and Twitter. Expansion plans  Within a year of establishment, Cake Empire will expand through establishing tradition brick and motor store fronts by using profits to purchase new stores.  These store fronts will serve to give customers a place to collect orders and to sit down and have a piece of cake.  Also, Cake Empire will seek to look for additional money to meet its operating costs through partnering with investors. Cake Empire’s main products o Cake empire will look to offer a diversity of confectionaries. This will include: i. Cookies ii. Cakes iii. Muffins iv. Soft drinks Area of Operation o Cake Empire will operate within the New York area. o It will offer free delivery for cakes within the New York area and charge a delivery fee for orders outside New York.  Here at Cake Empire, our goal is to bake and deliver quality healthy cakes to the comfort of your doorstep. Long range goals  To be the largest cake supplier in America.  The company’s strategy will be to use differentiation focus strategy in targeting its consumers.  This strategy seeks to divide the New York populous into high and low spending consumers and incorporating a marketing mix strategy to penetrate the market (Lui, 2018)  The company will also employ a market penetration strategy by keeping its cake prices lower than its competitors (Khan, 2014).  Cake Empire seeks to increase its popularity within 6 months of establishment through partnering with complementary industries and advertisement through social media sites.  To create a profit of $250,000 in the first year which will be reinvested in establishing more stores.  To increase profit margins by 20% each consecutive year.  Cake Empire’s cakes will come in several types, shapes and frosting colors according to consumer needs.  The main cake features will be cylindrical shaped cakes with white frosting as shown in the first slide. They will be of 1 &2 Kg sizes.  Cake ingredients will include: baking powder, flour, margarine, sugar, milk eggs and frosting. These will be fetched from the New York locale. Pre heat oven to 350 degrees F (175 degrees Celsius). ❖ Grease and flour a 9*9 inch pan with paper liners. ❖ Cream together eggs, then stir in vanilla. Combine baking powder and flour then add to the creamed mixture and mix. Add milk to the mixture and stir until the paste is smooth. Spoon batter into the prepared pan. ❖ Bake for 30-40 minutes. ❖ Cake order 1 Job cost card Money Customer; A Batch A custom Specifications 1 kg Red Velvet cake. Date of order 2/24/2019 Date of completion 2/25/2019 Job charges in ($) Previous months Current month Cost summary Material cost $0 $8.00 $8.00 Labour cost $0 $10.00 $10.00 Overhead $0 $12.00 $12.00 Totals $30.00 Units completed 50 Product unit cost $8.00 ❖ ❖ ❖ ❖ Business starting and operating licenses. Depreciation costs. Delivery costs. Insurance premiums.  Cake Empire shall use a job order costing system as its accounting system. This job order costing system is set to effectively assign and record cost per unit output (Maskell, 2016).  The job order costing system will allow the company to assign costs per cake.  This accounting system will be used in determining cake prices and deciding on whether the company will reach its set profit margin with the current cake pricing.  Starting a company is tricky at best. This paper shows the factors to be considered when establishing a company. Key among this is identifying a unique product to offer the target market and establishing a suitable location for the company.  The company seeks to have superior customer company interaction through stores and e-commerce. This will enable it to reach a profit margin of $250,000 which gradually grows with each consecutive year.  The company’s accounting system is designed to ensure all company transactions are taken into account. The flow of cost looks at how the company capital is handled.  Khan, M.T., (2014). The concept of 'marketing mix and its elements (a conceptual review paper). International journal of information, business, and management, 6(2).  Lui, W., Atuahene-Gima, K. (2018). Enhancing product innovation performance in a dysfunctional competitive environment. The roles of comprtitive strategies and Market-based assets. Industrial Marketing Management.  Maskell, B. H., Baggaley, B., & Grasso, L. (2016). Practical lean enterprise. Productivity Press. ...
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School: Carnegie Mellon University

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