As the bushfires devasted most of the farmland, major cities such as Melbourne, Sydney and Brisbane started to experience shortage in household products such as milk and bread. As business in household foodstaffs became lucrative, Mary decided to quit her job as asecondary school teacher earning AUD 6,000 per month to start her own milk and bread kiosk business. To start the business Mary decided first to utilise her rental property from which she was earning AUD 3000 per month. Second, Mary decided to use AUD 60,000 she had saved in the Commonwealth Bank from which she was earning 2.5% interest per month. Mary's expenditure during the first month of March included expenses on fixed assets and vairaible materials that include wages. The table below summarises Mary's expenditure and sales for the first month of her business in March 2020 as follows:

Mary's March 2020 Business Summary

Items Purchased (Procured)	Cost (AUD)/Item
Milk Section cash flow
1 Milk commercial freezer	3,500
1 milk truck	10,000
Cost of monthly packaging materials (Packaging materials depend on sales. Assume, this is the average cost of packaging materials).	2,000
1 cashier (wages depend on hours worked. Assume, this is the average monthly wage )	3,000
Commercial Cool room installation	15,000
Bread Section cash flow
2 Bread Mixers (Cost per bread mixer of 14,000 per machine )	14 000
Commercial refrigerator	3,500
2 Support Workers: (wages depend on hours worked. Assume, 3000 is the average monthly wage per worker)	3000 (Per Worker)
Cost of monthly bread dough sweeter ingridients (Depend on demand - Assume this is the average expenditure per month)	4,000
Bread van	20,000
Dough proofer machine	2,000
Bread heavy duty oven	8,000
2 Sheet pan racks (Cost per sheet pan rack is 1000)	1000
Bakeware tools (Assorted bakeware tools include: bread pans, muffin tins, cake pans, knives and spatulars)	5,000
Assume 30,000 litres of milk are purchased and sold per month. Assume 20,000 loaves of bread are producedand soldper month

Use the table to answer the questions below.

1. Calculate Mary's total cost and average total cost for each section (Milk and bread section). Exclude implicit costs.

2. Calculate Mary's variable cost and average variable cost for each section. Exclude implicit costs.

3. Assume Mary sells milk at AUD 1.50 per litre. Also, assume Mary sells each bread pack at AUD 3.00. Calculate Mary's accounting profit and economic profit for the month of March 2020.

Answer rating: 100% (QA)

Marys Business Summary March 2020 1 Total Cost and Average Total Cost Excluding Implicit Costs Milk ... View the full answer