Please check.
Mary Torres owns and operates a bakery. During the past week she sold 500 loaves of bread at $2.25 per loaf. The raw materials for each loaf cost Ms. Torres $1.80.
- Aside from the costs from raw materials, what other costs will Ms. Torres use to calculate her profit for the week?
Is the correct answer the price charged per loaf and how much money they gain per loaf?
For each disadvantage, decide what actions you would take to overcome that disadvantage. Analyze and describe how your actions might affect the profit your business earns.
**Risking the loss of your savings.
I put: You could be less risky, but then you might not make as much money as you could.
**Lacking steady wages and employee benefits.
I am not sure how to overcome this... ???
**Paying all the expenses of a new business.
You could cut back on expenses but then your business might not have many features that would interest people, which would cause you to lose money.
Mary Torres may have other costs, such as employees, rent and utility bills.
Mary has to have property taxes, utilities (water, garbage, electricity, etc), maintenance costs. These overhead costs are typically fifty percent of the cost of product.
For the disadvantage of risking the loss of savings, one action Mary Torres could take is to create a thorough business plan and financial projections to assess the potential risks and benefits. This could help in making informed decisions and reduce unnecessary risks. Additionally, Mary could consider investing in insurance coverage to mitigate potential losses.
For the disadvantage of lacking steady wages and employee benefits, Mary could explore different compensation models that align with the bakery's profitability. This could include implementing profit-sharing plans or offering performance-based incentives to motivate employees. Mary could also consider offering non-monetary benefits such as flexible work schedules or opportunities for skill development to enhance employee satisfaction.
To overcome the disadvantage of paying all the expenses of a new business, Mary could focus on cost-cutting measures without compromising the quality of the bakery's products. This could involve negotiating better deals with suppliers, optimizing inventory management to reduce waste, and exploring energy-efficient options to minimize utility costs. Additionally, Mary could explore partnerships or collaborations with other businesses to share certain expenses and resources, which could help reduce overall expenses.
These actions could affect the profit of Mary Torres' bakery in the following ways:
- By reducing unnecessary risks and making informed decisions, the bakery's profit could be protected from potential losses.
- Implementing alternative compensation models and offering non-monetary benefits could enhance employee morale and productivity, potentially leading to increased profit.
- Cost-cutting measures could help improve the bakery's profit margin by reducing expenses. However, it is essential to strike a balance between cost-cutting and maintaining the quality and features that attract customers, as cutting back too much could impact customer satisfaction and, ultimately, profit.
It is important to note that these actions are general suggestions and the specific outcomes may vary depending on various factors and circumstances.
Aside from the costs of raw materials, Mary Torres will use other costs to calculate her profit for the week. Some of these costs include:
1. Employee wages and benefits: If Mary has any employees working for her bakery, she will need to consider the wages she pays them, as well as any benefits such as health insurance or retirement plans.
2. Rent and utilities: Mary will have to pay rent for the space where her bakery is located. In addition, she will be responsible for utilities such as water, electricity, and garbage services.
3. Maintenance costs: The bakery may require regular maintenance and repairs to keep the equipment and premises in good working condition. Mary will need to factor in these expenses as well.
To overcome the disadvantage of risking the loss of savings, Mary could implement risk mitigation strategies such as:
- Diversifying her product offerings or expanding her customer base to reduce reliance on a single product or market segment.
- Setting aside an emergency fund or obtaining insurance coverage to protect against unexpected expenses or losses.
- Conducting thorough market research and analyzing potential risks before making any significant investments or business decisions.
To overcome the disadvantage of lacking steady wages and employee benefits, Mary could consider:
- Offering competitive wages and benefits to attract and retain skilled employees, which could lead to better productivity and customer satisfaction.
- Providing training and development opportunities to enhance employee skills and increase their value to the business.
- Exploring alternative compensation structures such as profit-sharing or performance bonuses to incentivize employees and tie their success to the success of the business.
To overcome the disadvantage of paying all the expenses of a new business, Mary could take the following actions:
- Carefully budgeting and tracking expenses to identify areas where cost-cutting measures can be implemented without sacrificing quality or customer satisfaction.
- Negotiating with suppliers for better pricing or terms, such as bulk discounts or extended payment periods.
- Exploring alternative funding sources, such as loans, grants, or partnerships, to alleviate the financial burden of starting a new business.
These actions may affect the profit the business earns in different ways. For example, by implementing risk mitigation strategies, Mary may reduce the likelihood of significant financial losses. Offering competitive wages and benefits may attract skilled employees, leading to improved product quality or customer service, potentially increasing profits. Carefully managing expenses may help increase profit margins by reducing overhead costs. Overall, these actions aim to address disadvantages and improve the financial stability and profitability of the bakery.