18.3: Salty Pawz Financial Information
Sales + Revenue: For the last 6 months, Wanda’s sales have broken down as shown below. She has also provided you with her cost for each variety of treat.
|
Products/Services |
% of Sales |
Sales Price |
COGS |
Contribution |
Profit Margin |
Weighted Profit Margin |
|
Party Pooch |
45% |
20.00 |
10.40 |
9.60 |
48.00% |
21.60% |
|
Chicken Cuties |
18% |
15.00 |
7.80 |
7.20 |
48.00% |
8.64% |
|
Bison Bites |
5% |
21.00 |
10.80 |
10.20 |
48.57% |
2.43% |
|
Lamb Lovies |
32% |
24.00 |
12.60 |
11.40 |
47.50% |
15.20% |
|
total |
100% |
Average profit margin: |
47.87% |
| Sales Price | COGS | |
| Chicken Cutlets | 1.25 | 0.65 |
| Bison Bites | 1.75 | 0.90 |
| Lamb Lovies | 2.00 | 1.05 |
Cost of Goods Sold. Wanda’s COGS include the packaging, labeling, the ingredients, and the time it takes to make the treats. Since she can bake them in big batches, her labor cost per unit is very low.
When Wanda ships her products, she charges just what it costs her. Shipping is done on a cost recovery basis and currently she doesn’t consider it in her income/expenses.
Monthly Expenses. Currently Wanda’s monthly expenses are:
|
Rent |
0.00 |
|
Electricity |
0.00 |
|
Telephone |
100.00 |
|
Water /Sewer |
0.00 |
|
Internet |
60.00 |
|
Website |
175.00 |
|
Salaries |
0.00 |
|
Owner's Draw |
1000.00 |
|
Office Supplies |
50.00 |
|
Loan Payment |
0.00 |
|
Insurance |
85.00 |
|
Other |
0.00 |
|
Total Overhead |
$1,470.00 |
Sales Mix:
Currently Wanda’s customers purchase her products at the following ratios:
|
Products/Services |
% of Sales |
|
Party Pooch |
45% |
|
Chicken Cuties |
18% |
|
Bison Bites |
5% |
|
Lamb Lovies |
32% |
Break Even Calculation. Based on her current monthly expenses and sales mix, this is what Wanda has to sell in order to break-even:
|
Products/Services |
% of Sales |
Sales Price |
COGS |
Contribution |
Profit Margin |
Weighted Profit Marg. |
|
Party Pooch |
45% |
20.00 |
10.40 |
9.60 |
48.00% |
21.60% |
|
Chicken Cuties |
18% |
15.00 |
7.80 |
7.20 |
48.00% |
8.64% |
|
Bison Bites |
5% |
21.00 |
10.80 |
10.20 |
48.57% |
2.43% |
|
Lamb Lovies |
32% |
24.00 |
12.60 |
11.40 |
47.50% |
15.20% |
|
Total: (Must equal 100%) |
100% |
Average profit margin: |
47.87% |
\(\frac{Total\,Overhead}{Average\,Profit\,Margin}=BREAKEVEN\)
\(\frac{$1,470.00}{47.87\%}=$3.070.91\)
Average Sales per Customer: $20.00
| Breakeven | Party Pooch | Chicken Cuties | Bison Bites | Lamb Lovies | |
| Monthly in Dollars | $3,070.91 | $1,381.91 | $552.76 | $153.55 | $982.69 |
| In Units | 69 | 37 | 7 | 41 |
Forecasting Supply and Demand. Wanda is at capacity for production out of her kitchen, so she believes that she is at the maximum income she can generate with her current structure. If Wanda changes her pricing structure, the following quantities demanded and quantities supplied will result.
Income Information. Here is a summary of Wanda’s Salty Pawz income information for the past 6 months.
|
INCOME: |
|
|
Party Pooch |
$ 40,500.00 |
|
Chicken Cuties |
$ 16,200.00 |
|
Bison Bites |
$ 4,515.00 |
|
Lamb Lovies |
$ 28,800.00 |
|
TOTAL INCOME: |
$ 90,015.00 |
|
COST OF GOODS SOLD: |
|
|
Party Pooch |
$ 21,060.00 |
|
Chicken Cuties |
$ 8,424.00 |
|
Bison Bites |
$ 4,515.00 |
|
Canine Craving |
$ 15,120.00 |
|
Total cost of sales |
$ 49,119.00 |
|
GROSS PROFIT |
$ 40,896.00 |
|
OPERATING EXPENSES: |
|
|
Rent |
$ - |
|
Electricity |
$ - |
|
Telephone |
$ 600.00 |
|
Water /Sewer |
$ - |
|
Internet |
$ 360.00 |
|
Website |
$ 1,050.00 |
|
Salaries |
$ - |
|
Owner's Draw |
$ 6,000.00 |
|
Office Supplies |
$ 300.00 |
|
Loan Payment |
$ - |
|
Insurance |
$ 510.00 |
|
Other |
$ - |
|
TOTAL EXPENSES |
$ 8,820.00 |
|
NET INCOME BEFORE TAXES |
$ 32,076.00 |