A Profit and Loss (P&L) statement is an essential part of determining how a business is doing. Imagine that the following reflects the first two quarters Tasty Cakes Bakery has been in business. The owner had saved funds to cover her living expenses prior to starting the business, so she does not intend to draw a salary for the first year. She is doing most of the business herself but has hired a part-time assistant for weekend mornings and when large orders come in. While the first quarter had some unexpected expenses when the oven broke down, overall it went well. During the second quarter, she got a bit of a bump in business due to the number of graduation and wedding cakes ordered. She was also asked to deliver an order of 500 cupcakes to a function at city hall, which required her to rent some equipment to transport and serve the order; however, the $800 that it paid more than covered the additional expense.




a. If you were going to spend more on marketing, which product would you emphasize and why?

b. Should the budget for office supplies and repairs be reduced for the next quarter? Explain your answer.