Question
Bobs Bakery sells three types of cupcakes, Chocolate with a berry on top, Vanilla with an icing face, Strawberry with sprinkles. The following table shows
Bobs Bakery sells three types of cupcakes, Chocolate with a berry on top, Vanilla with an icing face, Strawberry with sprinkles. The following table shows the sales price and variable costs for each type. The bakery incurs $300,000 a year in fixed expenses. Assume that it sells two Chocolate for every one Vanilla and every one Strawberry. Cupcake type Sales price Variable cost Chocolate with a berry on top $0.35 $0.20 Vanilla with an icing face $0.50 $0.45 Strawberry with sprinkles $0.40 $0.27 Required How many cupcakes of each type will be sold at breakeven point? What amount of revenue would need to be generated by each type of cupcake for the company to earn $60,000 in operating income?
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