Question: 1. Answer the following questions in essay format.
2. Your essay must include an introduction, body, and conclusion, and address all relevant parts of each question. Your response should be a minimum of 300 words in length. Make sure to cite any references you use. At a minimum, you must cite your textbook. Proper citation format for a reference includes the name of the author(s), the title of the work, the date of the publication, and the page number.
Cost-Volume-Profit Analysis
Suppose you have decided to start a business producing and selling a product of your choice from the following options: custom birthday cakes, lawn mowers or sport jackets.
For your essay, answer the following questions related to your product:
• Briefly describe the product you would produce and sell. What market will you target this product for? At what price would you sell your product? Make a projection of your sales in units for the first year of operations.
• Make a detailed list of the materials needed to make your product. (Use the textbook and/or outside research as necessary.) How much in materials will you need for the year? What is the cost of these materials?
• Make a list of expenses you would incur in your business venture. (Use the textbook and/or outside research as necessary.) Examples include rent, utilities, insurance, direct labor, manufacturing overhead costs and so on. Estimate the cost of each of these expenses per year.
• Classify all of your expenses as either fixed or variable, and calculate how many units of your product you would need to sell to break even.
• How much operating income would you like to earn in the first year? Calculate how many units you would need to sell to meet your target profit.
• How realistic is your potential venture? Do you think your target profit is achievable? Explain.