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Gross Margin<br />
The bakery-centric fast food business is a highmargin<br />
business. French Bakery, LLC management<br />
forecasts to achieve reasonably a 75% margin<br />
on the products sold across the forecast period.<br />
However, the management accounts for the cost of<br />
products unsold. With a short product life of 1 to 2<br />
days, those products represent a waste that would<br />
constitute 10% of the cost of products sold.<br />
The freight includes not only the delivery of raw<br />
materials, but also the delivery cost of products to<br />
remote customers.<br />
Taking into consideration the cost of products sold,<br />
the freight cost, and the cost of products unsold,<br />
the effective gross margin is forecast to be 66%.<br />
owner. Mr. Smith made a transfer in the amount<br />
of $74,580.00 <strong>from</strong> his personal bank account in<br />
France to his personal bank account in the US. He<br />
then withdrew $72,000.00 <strong>from</strong> his personal bank<br />
account in the US and deposited that amount in the<br />
Company’s bank account. In addition, he made a<br />
transfer in the amount of $27,130.00 directly <strong>from</strong><br />
his personal bank account in the Company’s bank<br />
account. The Company‘s outstanding balance after<br />
those two deposits was $99,130.00.<br />
Payroll<br />
The payroll including taxes is forecast to grow <strong>from</strong><br />
$237,000 with 10 employees working 40 hours a<br />
week in year 1 to $390,000 with 15 employees in<br />
year 5.<br />
Start-up expenses<br />
The $12,800 start-up expenses are understated<br />
since most of the expenses have already been incurred<br />
through the corporate bank account of the<br />
The owner of French Bakery, LLC will earn an<br />
annual salary in the amount of $45,000 in year 1<br />
growing to $49,000 in year 5.<br />
THE MONTHLY EBITDA FOR THE FIRST TWELVE MONTHS OF OPERATIONS IS FORE-<br />
CAST TO BE POSITIVE AS SHOWN IN THE TABLE.<br />
18<br />
French Bakery, LLC