Baking Brothers**

Baking Brothers 
 
Read the article Baking Brothers.  Be on the lookout for clues to help you answer each question.  

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Part A:  The cost of some items the brothers bake changes with the seasons. Use this information to find the gross profit margin for two sweet treats in different seasons. Round answers to the nearest cent or tenth.

3

Shane and Nigel’s recipe for sweet potato pie calls for 1.5 lbs of sweet potatoes. The other ingredients are staples that cost $10.52 year-round. Use this information to complete the chart in the Show Your Work Section.

3

The brothers’ strawberry cake recipe calls for 0.5 lbs of strawberries. The other ingredients are staples that cost $12.32 year-round. Use this information to complete the chart in the Show Your Work Section.

1

What would the winter gross profit margin of the strawberry cake be if they didn’t raise its price?

3

Gross profit margin compares the COGS to the sales price. What expenses are not factored in here? Explain.

Part B: Business owners have to make many financial decisions. Some may include taking out a loan. When you
take out a loan, you need to pay it back within a fixed amount of time. However, you are charged interest
on top of the money you borrowed. Interest is a fee the lender charges you to borrow money. 


Use the simple interest formula to solve the word problems below about small business expenses. You may use a calculator.

1

A baker wants to wants to take out a $120,000 loan to start a bakery. The fixed interest rate is 6%. He plans to pay off the loan after 5 years. How much will he pay the bank in interest?

1

How much will he pay the bank at the end of the 5-year loan in total?

2

The baker decides to buy the following supplies: 4 ovens at $4,500 each, 3 display cases for $2,000 each, 3 additional sinks at $550 each, and custom counters for $15,000. How much do the supplies cost?

2

He takes out a loan to pay for the supplies through another bank lender. The fixed interest rate is 5.25%. If he pays the loan off after 10 years, how much will he pay the bank in principal and interest?

2

Baking Brothers

Shane and Nigel’s recipe for sweet potato pie calls for 1.5 lbs of sweet potatoes. The other ingredients are staples that cost $10.52 year-round. Use this information to complete the chart in the Show Your Work Section.

The brothers’ strawberry cake recipe calls for 0.5 lbs of strawberries. The other ingredients are staples that cost $12.32 year-round. Use this information to complete the chart in the Show Your Work Section.

What would the winter gross profit margin of the strawberry cake be if they didn’t raise its price?

Gross profit margin compares the COGS to the sales price. What expenses are not factored in here? Explain.

A baker wants to wants to take out a $120,000 loan to start a bakery. The fixed interest rate is 6%. He plans to pay off the loan after 5 years. How much will he pay the bank in interest?

How much will he pay the bank at the end of the 5-year loan in total?

The baker decides to buy the following supplies: 4 ovens at $4,500 each, 3 display cases for $2,000 each, 3 additional sinks at $550 each, and custom counters for $15,000. How much do the supplies cost?

He takes out a loan to pay for the supplies through another bank lender. The fixed interest rate is 5.25%. If he pays the loan off after 10 years, how much will he pay the bank in principal and interest?

In total, how much has the baker spent on his business in principal? How much has he spent in interest?