Profit and Loss of a Food Booth at the Tech School - Essay Example

This is an analysis of the proposal to set up a food booth at the Tech school during games. Assumptions are set below. A proforma profit and loss is prepared to verify the viability of the proposal
Assumptions:
No. of students 500
10 percent will not buy 50 students
Selling price
Pizza 1.50
Hot dog 1.60
BBQ SANDWICH 2.25
COSTING
PIZZA 0.75 PER SLICE
Hot dog 0.50
BBQ SANDWICH 1.00
OTHER COSTS
BOOTH RENTAL 1,000 PER GAME 6,000
Oven rental 600

Helper 100 per game 600
assumptions
She anticipates selling twice as many hot dogs & sandwiches
Hot dog sales 450 persons x 2 900 consumptions $1.60 x900 = $1,440.00 $1,440 x 6 games = $8,460
Sandwiches 450 persons 450 consumptions $2.25 x 450 = $1,012.50 $1,012.50 x6 games = 6,075
Pizza sales combined sales of hot dogs and BBQ 1400 consumptions 1.50 x 1400 =2100 2100 x 6 games= 12,600.00
Total sales $ 27,135.00

Cost of sales
Pizza 0.75 per slice X 1400 consumptions $1,050.00 x 6 games 6,300.00
Hot dog 0.50 per piece X 900 $450.00 x 6 games 2,700.00
BBQ SANDWICH 1.00 PER PIECE X 450 $450.00 x 6 games 2.700.00
Cost of sales 11,700.00

Proforma Profit & Loss Statement
For a six-game period

Sales $23,760.00

Less:
Cost of sales 11,700.00

Gross profit 12,060.00

Fewer expenses

Booth rental 1,000 per game x 6 games 6,000.00
Oven rental 600.00
Helper 100.00 per game x 6 games 600.00
Total expenses 7,200.00

Net profit $4,860.00

a. The proforma P/L patterned after the Small business note, shows that it can afford the lease of the booth, oven rental, and wages of the helper. It shows a net profit of $4,860.00 after all expenses are deducted

b. Julia has a capital of 1500. Beginning expenses are as follows:
Beginning capital 1,500.00
Expenses beg.
Booth rental per game 1000.00
Oven rental, one-time payment of lease 600.00
Helper per game 100.00
Cost of sales initial game 1350.00
Total costs beg. 3,050.00
Additional Capital needed beginning of game 1,550.00
Julia needs to borrow $1550.00 as beginning capital. It is not advisable to borrow more because of the constraints of the number of students watching the game.

c. Julia needs a helper to assist her in the preparation of the BBQ sandwich. The business can afford to hire one helper. Read More