Ted wants to start a bakery business in Matloding village. He purchased the following equipment: electric stove P3 200; mixer P640; three large bowls P2 420; baking trays P800. Ted plans to produce 2 000 loaves of bread per week. He will incur the following expenses: rent for premises P3 000; flour P2 500; baking powder P270; cooking oil P350; salt P85; sugar P440; water P760; electricity P1 100.

1. aCalculate fixed costs. Show your working. [1]
2. bCalculate variable costs. Show your working. [2]
3. cCalculate the unit cost. Show your working. [3]
4. dAfter 6 months Ted prepared an Income Statement to find the net profit/loss. Explain why it is important for him to know the net profit/loss. [2]

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