Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child's first

Question:

Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $40 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows

Sales revenue .................................$840,000

Variable expenses............................. 630,000

Contribution margin ......................... 210,000

Fixed expenses ............................... 112,000

Operating income ........................... $ 98,000

Required

a. What is FirstCakes' Contribution margin per unit?

b. What is FirstCakes' monthly breakeven point in units?

c. What is FirstCakes' Contribution margin ratio?

d. What is FirstCakes' monthly breakeven point in sales dollars?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...