# Hello, I need some help



## laurac (May 31, 2007)

Hi, I somehow stumble onto this website, I am hoping that maybe I can get help with a project I have for my accounting class.

I have to be an owner of a bakery with a spending allowance of $10,000.
I have 3 employees and 2 recipes to work with.

I need information on things like insurance for a neighborhood bakery how much and where do you get your ingredients, how much do you pay your employees and just general every day concerns and issues for a small business.

Can someone please help me out or maybe you can direct me to a website or two to get some answers.
Thanks


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## mezzaluna (Aug 29, 2000)

Welcome to Chef Talk!

I'm moving your post to the Professional Baking forum, where it's likely to get a more rapid response.

Good luck!
Mezzaluna


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## laurac (May 31, 2007)

Spam attempt


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## thetincook (Jun 14, 2002)

If you want to figure your breakeven (I think this is what you are trying to figure out), you are going to need a lot more information then your spending allowance. Also you didn't mention if this was an operating budget for a period of time, or if it was a start up budget. Is this a wholesale or retail bakery?

Two of the key factors you are going to need to consider are the size and location of the space. Everything else pretty much flows from there.

There are a variety of places and sources you can get industry averages. They probally have them at your school library. You can also ask local vendors for price quotes.


Why don't you post your budget that you have so far, that way we can take a look at it.


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## laurac (May 31, 2007)

The project will demonstrate your comprehension of cost accounting and your ability to effectively communicate in writing. 
Assume you are a Baker with a small local Bakery with three employees (all relatively inexperienced) providing support to you. Your business consists primarily of local purchasers. 
The purpose of this Project is to give you hands-on experience in a manufacturing process - for example baking a cake. All the key elements of direct materials, labor and overhead are part of baking cakes, even if we do not think of this process as manufacturing. The basic flow of costs through a manufacturing process is critical to understanding and using managerial accounting information, but it is a process that seems foreign to many students. Baking cakes is a much more understandable process, and can help you internalize this basic cost accounting concepts along with internalizing some cake or pastry!
Using the methodology developed in this course, document the system (describe inputs, outputs, controls, and so on). Don't overlook manual functions. Pay particular attention to what reports will be necessary. 
Project Sample Outline
· Overview and Summary (In this section you will provide an overview of the Project, focusing on the scope of the project, a high level overview of the requirements, and the documents that are needed)
· Scope of Project - History of the Business, About the current business
· Issues and Concerns - In this section, you will identify any issues or concerns regarding the business
· Security Plan - Safeguarding your assets, i.e. alarm systems, theft prevention
· Backup Procedures - Data maintenance, plan in the event of an emergency, i.e. natural disaster
· Future Enhancements/Business Expansion - plans for company growth, larger location
· Appendix (In this section, provide sample business forms and sample reports) This is required 
· Sample Business Forms - Invoices
· Sample Reports
Activity Summary:
You have $10,000 budget per month. You are required to spend as much as possible. The cost of rent is $1,000 per month. Make-up your own amounts for utilities and other business expenses. 
For starters, you will need to find two of your favorite cake or cookie recipes. Using these recipes, you will brainstorm on the different stages involved in manufacturing cakes or cookies. Determine the basic stages and requirements for cake manufacturing. You will then manufacture the cakes and cookies and report on the flow of costs in the manufacturing process (NOTE: You can complete this activity by visualizing the cake manufacturing process and recording each aspect as you envision it. This may mean a trip to the local grocery store to ascertain the costs of your envisioned materials and supplies.)
[Activity Outcome
When you have completed the manufacturing activity, you should have a better comprehension of the three key components of manufacturing costs (direct material, direct labor, manufacturing overhead) and how these costs flow through a manufacturing process. [/COLOR]Based on your manufacturing of the cakes, you should be able to analyze the costs that were incurred or added at each stage of the process and prepare a report that explains the cost flow and total costs of the cakes manufactured. Prepare a raw materials list, including quantities and cost.What would be a good price for each cake or cookie

(The tables below must be completed) 
RAW MATERIALS
Quantity Description Unit Cost Total Cost

DIRECT LABOR
Quantity Description Unit Cost Total Cost

OVERHEAD
Quantity Description Unit Cost Total Cost

1. Include the two recipes used
2.Prepare a Balance Sheet and Income Statement. (include the entire financial statement and not just a portion of it)
3. A two-paragraph summary/conclusion of what you learned as a result of the Project


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## panini (Jul 28, 2001)

This is such a dated project. Now a days, this type of project is basically, "indirect", and also a small part of why food service projects have a high rate of failure.
There are plenty of businesses falling due to the "indirect" ,labor,cost,materials.
You must pay attention to EVERY penny spent. Nothing is too costly or inconvienient to keep track of.
If you don't have a project on "indirect" expences following this, I would challenge and do the project on that.:chef::beer::blush::smoking:
Kidding!
I think this is a good project for all cooks and chefs to do. It may open some eyes, especially all those who are always complaining about wages, bosses, etc. You know, those Chefs and Cooks that run and grab product from the stoorroom and don't have a clue how it got there.


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## thetincook (Jun 14, 2002)

You mean there's no kitchen fairy?

I remember when chef dumped out the trash and started picking out all the bell pepper, tomato, and onion trim that got wasted. God forbid you forgot to take a spatula to that #10 can of tomato product.

I totally agree that indirect/overhead expenses are the crux in this business. There's a concept called "leverage" that means if you have low fixed costs in relation to variable costs, a small increase in sales can lead to a great increase in profit.

Back to the project:

Laurac, if you have access copy of Quickbooks you can save yourself a ton of time on this project. If you are inexperienced in Quickbooks, I'd be more then happy to help you transfer it from paper to QB.

Do you have your chart of accounts setup? 
Did you pick your two recipes yet?
Are you doing wholesale only?

The recipes will determine what equipment you will need.

You should also take a look at your local payroll requirements as well as your insurance costs, utility rates, and sales tax if any(if you're retailing).


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## david jones (Jan 15, 2000)

And no plumber.....?


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## david jones (Jan 15, 2000)

I like the kid Jimmy who has to put on an event for 500 in a wheat field - no water, power, sewer, etc. At least he told his prof that he would say no to the gig first!


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## thetincook (Jun 14, 2002)

Okay, you lost me with that one.:blush: I got a kick out of jimmy too.


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## david jones (Jan 15, 2000)

LOL - you said no kitchen fairy...

And I said no plumber...

'cause they blink and it's $10,000


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## laurac (May 31, 2007)

I do have quickbooks for my husband's business and was able to open a fictitious company for myself. I was able to set up my chart of accounts and get together my financial statements.
Right now I am working on my breakeven analysis.
The only thing I am having trouble with is the flow of the cost. I am not sure of how the professor wants it presented. Any suggestions?


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## david jones (Jan 15, 2000)

You don't need QB for this. The simplest break even is expenses/(1-COGS)

Let that sink in for a moment ----

If you charge $10 for a meal and it costs you $3.50 to make that meal, then your gross profit is $6.50 per meal. 

Look at the equation above - what it says is, that for every dollar you collect from a customer, you have you have part of that dollar ($1-Cost of Goods Sold) to pay your other expenses - like rent, utilities, etc.

When someone says that their cost of sales is 30%, that means that they have 70 cents per doalr to pay the other business expenses.

We can discuss prime cost later.


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## panini (Jul 28, 2001)

your financial statement will include cash flow, income, bal. sheet and capital


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## david jones (Jan 15, 2000)

LOL

Maybe she should walk before running? Or crawl before standing?


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## panini (Jul 28, 2001)

after a minute of thinking about your ?.
I think you probably want to chart it, like the manufacturing, to finished product, to cost of goods.
Might look in QB under reports or charts or graphs
does that make sense?


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## panini (Jul 28, 2001)

after a minute of thinking about your ?.
I think you probably want to chart it, like the manufacturing, to finished product, to cost of goods.
Might look in QB under reports or charts or graphs
does that make sense?


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## panini (Jul 28, 2001)

after a minute of thinking about your ?.
I think you probably want to chart it, like the manufacturing, to finished product, to cost of goods or backwards.
Might look in QB under reports or charts or graphs
does that make sense?


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## panini (Jul 28, 2001)

oh my,sorry, running and got the hiccups. I think QB should give you basics. P&L's, all that good junk:crazy:
Please make sure you let your hubbie know your messin around with QB, he may want to back up:lol:


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## thetincook (Jun 14, 2002)

Laura, it sounds like you're pretty much on the ball! I thought you were just a green newbie.

Flow of costs is pretty easy. Get a piece of paper and draw the T accounts involved. Take a look the j/e's you'd need to record the activities. Post the debits and credits to the T accounts and draw arrows to show the relationship between them. If I can figure out how, I'll post a pic of what I mean. Don't know if QB would do a flowchart like that...

Just out of curiosity, are you using job costing or process costing?

Flow of product is something entirely different, and is much more detailed, It's good tool for cost control and planning. Think HACCP.

David: While Quickbooks isn't neccesary, it makes compiling the financial statements, budgets, invoices, etc a lot easier.


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## thetincook (Jun 14, 2002)

Did a quick and dirty one with MS Powerpoint. I am sure you can make a nice one with it.


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## risque cakes (Apr 20, 2007)

you can also decide to work with your percentages..pie chart your starting operating costs and decide what profit margins you wish to work with. 

I do agree that the project is an out dated one, and similar to one's we did in Menu and Food costing class..( very frustrating, but good to know the 'basics" )

but,

a simple way to Overview your moneys would be..

if you're selling your product for 12.50 ( cheap I know) a specialtiy cake..

what % are you setting aside for your space
your products
your insurance
your costs ( all of them )
% for hidden costs

when you break it down that way you can quickly see what/which of your 2 recipes will be making the biggest return so you can run your "business' sucessfully..

( I hope I made some sense here)


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## laurac (May 31, 2007)

Thank you all for the time and information that you have given me. I got a lot of ideas and tons of information from everyone. Using quickbooks was a real time saver because of the ability to use their reports and graphs.
The project was due today, I had so much info I went over the allowed amount of pages.
Once again Thank you


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## risque cakes (Apr 20, 2007)

Well, I hope your professor gave you the extra grade for work beyond expectation!


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## laurac (May 31, 2007)

I hope so too this has been a hard semester


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## risque cakes (Apr 20, 2007)

and she should head herself to the school library to do the assigned project for her professor and not have us do it for her?

If she needs clarifications, she should hunt down the professor and ask him...after all...in this situation, he would be the "HORSE'S HEAD"..lol


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