Sal's Cupcake Factory (khanacademy.org/downloads/cupcakes.

xlsx

300,000
-47%
-44%
-41%
-38%
-35%
-32%
-29%
-26%
-23%
-20%
-17%
-14%
-11%
-8%
-5%
-2%
1%
4%

400,000
-46%
-42%
-38%
-34%
-30%
-26%
-22%
-18%
-14%
-10%
-6%
-2%
2%
6%
10%
14%
18%
22%

500,000
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%

Quantity
600,000
-44%
-38%
-32%
-26%
-20%
-14%
-8%
-2%
4%
10%
16%
22%
28%
34%
40%
46%
52%
58%

$2.40

$2.30

50%-100%

$2.20

$2.10

$2.00

$1.90

0%-50%

$1.80

50%
50%
$1.10
$1.20
$1.30
$1.40
$1.50
$1.60
$1.70
$1.80
$1.90
$2.00
$2.10
$2.20
$2.30
$2.40
$2.50
$2.60
$2.70
$2.80

$1.70

Capacity utilization
Return on asset

$1.60

1,500,000
(500,000)
1,000,000
(500,000)
500,000

-50%-0%

$1.50

Revenue
Cost of goods sold
Gross profit
Overhead
Operating income

Price

Price/Quantity Sensitivity

$1,000,000
1,000,000 cupcakes/year
$
1.00
$
3.00
500,000

$1.10
$1.20
$1.30
$1.40

Investment in Factory
Annual Capacity
Cost per cupcake
Price charged per cupcake
Cupcakes sold in a year

700,000
-43%
-36%
-29%
-22%
-15%
-8%
-1%
6%
13%
20%
27%
34%
41%
48%
55%
62%
69%
76%

s/cupcakes.xlsx)

tity Sensitivity
50%-100%

100%-150%

800,000
-42%
-34%
-26%
-18%
-10%
-2%
6%
14%
22%
30%
38%
46%
54%
62%
70%
78%
86%
94%

$2.80

300,000
$2.70

$2.60

$2.50

$2.40

800,000

900,000
-41%
-32%
-23%
-14%
-5%
4%
13%
22%
31%
40%
49%
58%
67%
76%
85%
94%
103%
112%

1,000,000
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%

Sal's Cupcakes
Investment in Factory
Annual Capacity
Cost per cupcake
Price charged per cupcake
Cupcakes sold in a year
Revenue
Cost of goods sold
Gross profit
Overhead
Operating income

Capacity utilization
Return on asset
Aggregate Capacity
Aggregate Demand
Aggregate Utilization
Aggregate Returan on Assets

Imran's Cupcakes
$1,000,000
1,000,000
$
1.00
$
3.00
500,000
1,500,000
(500,000)
1,000,000
(500,000)
500,000

Investment in Factory
Annual Capacity
Cost per cupcake
Price charged per cupcake
Cupcakes sold in a year

$
$

$1,500,000
2,000,000
0.90
3.00
300,000

Revenue
Cost of goods sold
Gross profit
Overhead
Operating income

900,000
(270,000)
630,000
(700,000)
(70,000)

50% Capacity utilization

50% Return on asset

15%
-5%

3,400,000
1,000,000
29%
17%

Vikram's Cupcakes
Investment in Factory
Annual Capacity
Cost per cupcake
Price charged per cupcake
Cupcakes sold in a year

$
$

$500,000
400,000
1.10
3.00
200,000

Revenue
Cost of goods sold
Gross profit
Overhead
Operating income

600,000
(220,000)
380,000
(300,000)
80,000

Capacity utilization
Return on asset

50%
16%