The Flour Power Bakery makes 200 cherry cheesecakes at a cost of $2.45 each. If a spoilage rate of 5% is anticipated, at what price should the cakes be sold to achieve a 40% markup based on cost
2.45*1.4/.95 = 3.61
Check:
5% (10) spoiled, so 190 sold
cost of 200 = 490
revenue = 190*3.61 = 686 = 490*1.4
cost= 490 (200*2.45)
Total Estimated SP based on 40%Mcost= 490(100%+40%)=490(1.40)=686
spoilage= 5%= 200*.05=10
SP= Estimated SP/total qty-anticipated spoilage
SP= 686/(200-10)= 686/190=$3.61
To determine the selling price of the cherry cheesecakes, we need to consider the cost, spoilage rate, and desired markup. Here's how to calculate it step by step:
Step 1: Calculate the total cost of making the cheesecakes.
The Flour Power Bakery makes 200 cherry cheesecakes at a cost of $2.45 each. Therefore, the total cost would be:
Total cost = 200 cheesecakes * $2.45 per cake
Step 2: Account for the anticipated spoilage rate.
Given a spoilage rate of 5%, we need to ensure that the cost of each cake covers this percentage in case of spoilage. To do this, we add the spoilage amount to the total cost:
Total cost with spoilage = Total cost / (1 - spoilage rate)
Total cost with spoilage = Total cost / (1 - 0.05)
Step 3: Determine the desired markup based on cost.
To achieve a 40% markup based on cost, we need to find the selling price that is 140% of the total cost with spoilage. Let's calculate:
Selling price = Total cost with spoilage * (1 + markup)
Selling price = Total cost with spoilage * (1 + 0.4)
Step 4: Calculate the selling price per cake.
Finally, we divide the selling price by the number of cakes to determine the price per cake:
Price per cake = Selling price / Number of cakes
By following these steps, you should be able to calculate the price at which the cakes should be sold to achieve a 40% markup based on cost.