Non-Profit Organization: Breakeven At A Bakery

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For this particular study, I looked at a bakery. It was located on a college campus and it was a non-profit organization, meaning that they don’t make any money, so their income should be zero. As it is very difficult to meet exactly zero, breakeven is usually around zero, give or take a few dollars. There were students that oversaw the selling and management aspects of the organization, but civil service employees baked the goods this bakery sold. When the supervisor hires a new financial supervisor, the original prices of the products needed to be updated, in order to be the best for their customers. He said that for the single serve products there would be a maximum price of \$1.50, to not raise any of the prices more than twenty-five percent,…show more content…
Smith then decides that he wants to see how the table would change if he decided to use a different bakery make the baked good for the store instead of civil service. With this change he expects the average demand by forty percent, and the bakery will charge two hundred percent of the current material costs. So, for this new table, to find the cost basis, you would take the direct material costs for the baked goods and multiply it by two hundred percent, and the drinks would stay the same. To find the markup percentage, you would do the same as you did with the original table by finding the total revenue and variable costs, including the change in demand that would occur do to getting the goods from a different bakery. To find the unit cost, you would take the new cost basis and multiply it by the new markup percentage for each item. To find the fourth column, you would take the original price and multiply it by one hundred and twenty five percent, just like in the original table. The fifth and sixth columns would also be the same as in the original table. To find the seventh column, you would use the same process as you would in the original table. To find the final prices that you could charge, I also used the same method as the original tables, making sure to charge above the cost basis price, but for the most part below the previous price. I looked at the goods that had high demand and tried to keep those prices fairly low because they sold a lot, and if they were…show more content…
This results in a higher total cost, but because they are outsourcing, their average weekly demand goes up. So the business is able to charge lower prices in order to break even. I think that because the business is a non-profit organization, it doesn’t really matter whether they outsource or not. If the business chooses to either have civil service or the other bakery produce their baked good, it doesn’t matter because they will be able to have a net income around zero either way. I think that outsourcing would be more beneficial to the customers because with outsourcing, the prices will be much cheaper than if the civil services were the ones producing the baked goods. I think outsourcing would be the better choice for this non-profit business because even though, their net income is around zero either way, they are able to serve more customers by