Josh made me uncomfortable. He asked a question and I had to admit I didn’t know the answer.
So I gave him a homework assignment.
“I found the cost of bagel chips. I also found the cost of bagels.”
Name: Joshua Columbus
“There are 6 bagels per bag. Each bagel slices into 5 slices,” Josh said. “So it’s 30 chips per bag. That’s for COGS.”
COGS: Cost Of Goods Sold
Bagel Chips: $2.79
“Next, I went to wages,” Josh said. “I figured out how much it costs the baker, the slicer and the bagger.”
What about the candlestick-maker?
Baker: ¢.56 per/bag
Slicer: ¢.50 per/bag
Bagger: ¢.60 per/bag
“Bagging is the hardest part,” Josh said. “It takes the longest.”
Needless to say, Josh hates bagging.
“It’s not the hardest,” he backed off. “It could be the hardest. It depends. Next, I found the profit margins. I subtracted the $5.00 a bag of bagel chips are sold for, minus the COGS to find the Gross Margin.”
GM: $2.21 per/bag
“Then I multiplied GM times the amount sold per month, the average of it, which is around 50 bags of bagel chips per month. That’s the profit.”
Profit: $110.45 per/month
“There’s a but though.”
There’s always a but though.
“We don’t slice the bagels every day because there’s not a big demand for bagel chips. So then I started thinking. We throw all the bagels out because we can’t slice them since they don’t sell. So when we throw them out, and assuming that we throw out 70 bagels, we lose.”
Loss: $6.23 per/day
“That’s when we don’t slice bagels. And throw them out. But on the days we do slice bagels, which is about every 3 days, out of the 70 bagels left over, we only slice 40 bagels because we can’t slice certain types of bagels, since they put too much wear and tear on the slicer.”
Slice Challenged Bagels: Salt, Garlic, Blueberry and Whole Wheat Bialys
“So, from the ones we can’t slice, on the days when we do slice, we lose.”
Loss: $2.67 per/day we slice bagels
Loss: $6.23 per/day we don’t slice bagels
“The cost of the bagels thrown out that are over-produced is this…”
“That’s the bagels thrown out per month. They’re over-produced. That’s if we do not make the bagel chips at all. The cost of the bagels thrown out if we continue to make the bagel chips is this…”
“That’s if we slice bagels every 3 days, which is what we’re doing now. So, in conclusion.”
Oh, Good God. The Conclusion. Lord Have Mercy. The Conclusion.
“I suggest we cut back dramatically, or stop selling Salt, Garlic and Blueberry Bagels. Plus, Whole Wheat Bialys. We can’t slice them. And they don’t sell. Also, start making chocolate chip and cinnamon bun bagels. Serve them hot. So they melty in your mouthy.”
Suggested Price: $1.49
“I suggest marketing bagel chips on weekends by putting them in bread baskets for lunch and dinner, since no one really eats bagel chips for breakfast.”
He stopped talking. Blinked at me. Twice.
“That’s it,” he said. “That’s all I got. What? Do you have any questions?”
Josh is having corned beef on challah with 1000 Island Dressing. And pickles. Lots of pickles. So many pickles, I’m uncomfortable. We must be taking a loss. But I’m not sure.
It’s his next homework assignment.