You have decided to get into the business of selling gourmet brownies. The brownies you will...

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You have decided to get into the business of selling gourmet brownies. The brownies you will sell can either be made for you, by contracting with a commercial bakery (the buy alternative) OR you can make them yourself (the make alternative). You decide to build a spreadsheet that will allow you to enter the all the relevant data to help you analyze which is the better option. Make Cost Components - with this alternative you will buy the ingredients to make the brownies, hire workers to perform the baking tasks and purchase baking equipment. What follows are how to compute these 3 cost components: a) Ingredients - it takes 10 oz. of ingredients to make one brownie. The following table shows the cost of the ingredients that are used to make the brownies: 12 pts Quantity in oz. Cost per oz. 1-100,000 .0135 100,001 150,000 .0129 150,001 200,000 .0125 200,001 300,000 .0117 300,001+ .0110 b) Labor - it takes 30 seconds of labor to make 1 brownie. Assume labor costs are $12.50/hr. 12 pts c) Equipment - you determine that you need to purchase an oven and a mixer. An oven costs $13,000 and the mixer costs $17,000. You will take out a loan to pay for both pieces of equipment and pay it off in one year at an interest rate of 8.5%. You will make monthly payments (=12 payments). Regardless of how many brownies you are making, add the cost of one month of loan payments. 10 pts Buy Cost Components - with this alternative you will contract a commercial bakery to make the brownies for you. There are two cost components. a) Purchase the bakery will charge you $0.25 per brownie for the first 10,000 brownies you purchase $0.21 per brownie for each brownie over 10,000 purchased For example, if you purchased 13,000 brownies you would pay (.25 10,000) + (.21 * 3,000) 14 pts b) Administration - $.0.03 per brownie but a minimum of $1,000. That is, the smallest amount of money you will spend on administration is $1,000. 10 pts c) Warehousing/Shipping - you will have to pay for storing the brownies after they are made by the commercial bakery. The rate is .015 per brownie if you are purchasing over 20,000 brownies. Otherwise the rate is .025 per brownie. 12 pts You have decided to get into the business of selling gourmet brownies. The brownies you will sell can either be made for you, by contracting with a commercial bakery (the buy alternative) OR you can make them yourself (the make alternative). You decide to build a spreadsheet that will allow you to enter the all the relevant data to help you analyze which is the better option. Make Cost Components - with this alternative you will buy the ingredients to make the brownies, hire workers to perform the baking tasks and purchase baking equipment. What follows are how to compute these 3 cost components: a) Ingredients - it takes 10 oz. of ingredients to make one brownie. The following table shows the cost of the ingredients that are used to make the brownies: 12 pts Quantity in oz. Cost per oz. 1-100,000 .0135 100,001 150,000 .0129 150,001 200,000 .0125 200,001 300,000 .0117 300,001+ .0110 b) Labor - it takes 30 seconds of labor to make 1 brownie. Assume labor costs are $12.50/hr. 12 pts c) Equipment - you determine that you need to purchase an oven and a mixer. An oven costs $13,000 and the mixer costs $17,000. You will take out a loan to pay for both pieces of equipment and pay it off in one year at an interest rate of 8.5%. You will make monthly payments (=12 payments). Regardless of how many brownies you are making, add the cost of one month of loan payments. 10 pts Buy Cost Components - with this alternative you will contract a commercial bakery to make the brownies for you. There are two cost components. a) Purchase the bakery will charge you $0.25 per brownie for the first 10,000 brownies you purchase $0.21 per brownie for each brownie over 10,000 purchased For example, if you purchased 13,000 brownies you would pay (.25 10,000) + (.21 * 3,000) 14 pts b) Administration - $.0.03 per brownie but a minimum of $1,000. That is, the smallest amount of money you will spend on administration is $1,000. 10 pts c) Warehousing/Shipping - you will have to pay for storing the brownies after they are made by the commercial bakery. The rate is .015 per brownie if you are purchasing over 20,000 brownies. Otherwise the rate is .025 per brownie. 12 pts