Westside Bakery is considering opening a new branch in Abingdon, IL. Westside will initially sell sell only loaves of wheat bread. The fixed costs including building, ovens, and displays total $60,000. The variable cost for each loaf of bread is .50 each. West side figures to sell loaves of wheat bread for $2 each.
1. What is the break even point?
2. Assume that Westside estimates the demand to be 6,000 loaves per month. What profit or loss is anticipated with this level of demand for the year? (Use 12 months to calculate the year's demand and do not include units.)
3. Selling 5,000 loaves per month, what is the minimum price per loaf that Westside must charge in order to breakeven for the year?
4. If Westside believes they can raise the price to $2.50 and sell the same amount of loaves , would you recommend they do so? Based solely on profit?
5. At a price of $2.50, what is the anticipated profit for the year, given a demand of 6,000 loaves per month?