Cakes Company estimates its variable costs per cake produced to be $5.00. The company plans to make 100 cakes. The companys fixed costs are $2,000.

a.What price should the company charge per cake to break even?

b.What happens to the breakeven price if the company reduces its variable costs per cake to $2.50 (a reduction of 50%) ?

c.What happens to the breakeven price if, instead of reducing variable costs, they reduce their fixed costs by 50% to $1,000?