Sharon is a baker who owns a small bakery called Pie in the Sky that sells cherry pies. She has been debating adding new pies into her offerings, including blackberry and apple. Sharon is preparing a budgeted income statement for April so she can compare budgeted net income, when selling just cherry pies, to budgeted net income when selling other types of pies as well. She has decided that she will be able to sell the pies for the following prices: Cherry, $12; Blackberry, $10; and Apple, $13. Sharon will be able to produce 400 pies a month regardless of what kinds of pies she chooses to bake and sell. The pies have the following costs associated with them:
Sharon took out a $10,000 loan with an Annual Percentage Rate (APR) of 12% to begin her business, and she will have a flat tax rate of 21%. Her monthly fixed selling, general, and administrative (SG&A) expenses include the following: a. If Sharon decides to only sell cherry pies, then what will her budgeted sales revenue be for April? b. Assuming that Sharon proceeds with a), what would her gross margin and budgeted net income be for April? c. If Sharon decides to sell 200 cherry pies and 100 each of both blackberry and apple, then what would her budgeted gross revenue be for April? d. Assuming that Sharon proceeds with c), what would her budgeted gross margin and net income be for April? e. Based upon what you have learned from choices b) and d), which approach would you encourage Sharon to utilize?

Question

Sharon is a baker who owns a small bakery called Pie in the Sky that sells cherry pies. She has been debating adding new pies into her offerings, including blackberry and apple. Sharon is preparing a budgeted income statement for April so she can compare budgeted net income, when selling just cherry pies, to budgeted net income when selling other types of pies as well. She has decided that she will be able to sell the pies for the following prices: Cherry, $12; Blackberry, $10; and Apple, $13. Sharon will be able to produce 400 pies a month regardless of what kinds of pies she chooses to bake and sell. The pies have the following costs associated with them:
  Sharon took out a $10,000 loan with an Annual Percentage Rate (APR) of 12% to begin her business, and she will have a flat tax rate of 21%. Her monthly fixed selling, general, and administrative (SG&A) expenses include the following: a. If Sharon decides to only sell cherry pies, then what will her budgeted sales revenue be for April? b. Assuming that Sharon proceeds with a), what would her gross margin and budgeted net income be for April? c. If Sharon decides to sell 200 cherry pies and 100 each of both blackberry and apple, then what would her budgeted gross revenue be for April? d. Assuming that Sharon proceeds with c), what would her budgeted gross margin and net income be for April? e. Based upon what you have learned from choices b) and d), which approach would you encourage Sharon to utilize?

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The Answer of Sharon is a baker who owns a small bakery called Pie in the Sky that sells cherry pies. She has been debating adding new pies into her offerings, including blackberry and apple. Sharon is preparing a budgeted income statement for April so she can compare budgeted net income, when selling just cherry pies, to budgeted net income when selling other types of pies as well. She has decided that she will be able to sell the pies for the following prices: Cherry, $12; Blackberry, $10; and Apple, $13. Sharon will be able to produce 400 pies a month regardless of what kinds of pies she chooses to bake and sell. The pies have the following costs associated with them:
  Sharon took out a $10,000 loan with an Annual Percentage Rate (APR) of 12% to begin her business, and she will have a flat tax rate of 21%. Her monthly fixed selling, general, and administrative (SG&A) expenses include the following: a. If Sharon decides to only sell cherry pies, then what will her budgeted sales revenue be for April? b. Assuming that Sharon proceeds with a), what would her gross margin and budgeted net income be for April? c. If Sharon decides to sell 200 cherry pies and 100 each of both blackberry and apple, then what would her budgeted gross revenue be for April? d. Assuming that Sharon proceeds with c), what would her budgeted gross margin and net income be for April? e. Based upon what you have learned from choices b) and d), which approach would you encourage Sharon to utilize?

Sharon Is a Baker Who Owns a Small Bakery Called