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ces Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake. Ingredients $ 17.00 2.50 1.40 Overhead
ces Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake. Ingredients $ 17.00 2.50 1.40 Overhead (box, etc.) 0.20 $3,850.00 Direct labor Fixed cost per month Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.) a. Sales price increases by $1.00 per cake. Break-Even Point 227 cakes Check my b. Fixed costs increase by $500 per month. Break-Even Point 277 cakes c. Variable costs decrease by $0.35 per cake. Break-Even Point 337 cakes d. Sales price decreases by $0.50 per cake. Break-Even Point 291 cakes 1 2. Assume that Cove sold 400 cakes last month. Calculate the company's degree of operating leverage. (Round your answer to 4 decimal places.) Degree of Operating Leverage 3.9400 3. Using the degree of operating leverage, calculate the change in profit caused by a 10 percent increase in sales revenue. (Do not round your intermediate calculations. Round your final answer to 2 decimal places. (i.e. .1234 should be entered as 12.34%)) Effect on Profit 33.39 %
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