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Item & Ingredients	Cost	Standard per Cake
conventional oven	$6000 (depreciate over 5 yrs on a straightline basis with no residual/salvage value	n/a
refrigerator	provided by landlord	n/a
baking pan, licenses	provided by dad	n/a
baking flour	$24 per 8 pound bag	1 pound
eggs	$2 per dozen	4 eggs
sugar	$15 per 25 pound bag	1 pound
baking soda	$6 per 14 pound box
butter	$6.50 per 4 pounds	1 pound
raisons	$8 per 2 pounds	1/2 pound
others	$30 for all 4 boxes per month
rum	$12 per bottle	1/4 bottle
utilities	$50 per month
mobile phone	$50 per month
salary-keisha	$500 per month
salary-nieces	$9 per hour	1 person 1.5 hrs per cake
salary-aunt	$100 per month
accountant	$100 per month
estimated moh	$5 per cake

Although business was off to a good start in January, Keisha realized that she will need to be profitable in order to continue as a viable business. Keisha discussed the subject of profitability with her accountant who suggested that she first needs to determine her breakeven point in both unit sales and dollars. He explained to her that breakeven is the point where all costs are covered by sales and profit is equal to zero. He also suggested that the company should establish a monthly target profitability in order to determine the amount of cakes it would need to sell to achieve this level.

Since Keisha did not know how to perform this calculation and in order to save money, she asked you to calculate the companys breakeven point and the target sales needed to achieve a monthly profit of $700.

Required: Calculate K&J Bakery Incs breakeven point in both units and sales dollars. Also calculate the sales needed in order to achieve a monthly profit of $700.

Note: Use four decimal places in converting from total to per unit cost.

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