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You are going to start a company selling bottles of bacon soda (not baking soda). You have determined that to bottle your masterpiece, youll need to pay a bottling company $1.45 per bottle produced. They can send you 10 cases (48 bottles per case) for a $240 shipping cost. Youll also need to hire someone to place your labels on each bottle once they arrive from the bottling company. You pay $.25 per label from an online supplier. Lets assume you are paying someone $.05 for each label placed on a bottle. Since you will use a direct selling process, you will not incur a shipping fee to get each bottle to your customers. However, you decide to expand your distribution by offering $.25 per bottle sold as a commission to anyone who would help you sell your product. In addition to your product costs, you have some other costs. You decide to be responsible and get business insurance. This costs you $25 per month. You will be running your business out of your home, so you wont incur costs for utilities, rent, or depreciation. However, you took a loan from your rich uncle for $5,000. To pay back that loan, you must pay him $50 per month. You also decide to put an ad. in the local newspaper each month to get the word out about your new bacon soda. That ad costs you another $50 per month. Through market research, you have estimated that you will sell all 10 cases from your initial order in the first month of operation. You have also estimated that you will be able to sell 20 cases per month for the second and third months, and then 40 cases per month for months 4 and 5 of operation. You decide to use the keystoning approach to price your bottles of bacon soda. This means you will double your total variable costs per unit to determine your price. Respond to the following questions and tasks. Be sure to show your calculations where needed. 1. What is the one-unit cost of bacon soda? (Identify both variable and fixed costs in calculating the one-unit cost.) 2. Create a five-month pro forma for the bacon soda company.

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