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Cove's Cakes is a local bakery. Price and cost information follows: Price per cake $ 14.31 Variable cost per cake Ingredients 2.19 Direct labor 1.06
Cove's Cakes is a local bakery. Price and cost information follows: Price per cake $ 14.31 Variable cost per cake Ingredients 2.19 Direct labor 1.06 Overhead (box, etc.) 0.21 Fixed costs per month 3,472.00 Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: a. Sales price increases by $1.30 per cake. b. Fixed costs increase by $490 per month. c. Variable costs decrease by $0.26 per cake. d. Sales price decreases by $0.50 per cake. 2. Assume that Cove sold 340 cakes last month. Calculate the company's degree of operating leverage. 3. Using the degree of operating leverage, calculate the change in profit caused by a 13 percent increase in sales revenue. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate Cove's new break-even point under each of the following independent scenarios: Note: Round your answers to the nearest whole number. a. Sales price increases by $1.30 per cake. b. Fixed costs increase by $490 per month. c. Variable costs decrease by $0.26 per cake. (1. Sales price decreases by $0.50 per cake. Show less A Break-Even Point 1a. Sales price increases by $1.30 per cake cakes 1b. Fixed costs increase by $490 per month cakes 1c. Variable costs decrease by $0.26 per cake. cakes cakes Required 2 > 1d. Sales price decreases by $0.50 per cake \fRequired 1 Required 2 Required 3 Using the degree of operating leverage, calculate the change in prot caused by a 13 percent increase in sales revenue. Note: Round your final answer to 2 decimal places. (i.e. 0.1234 should be entered as 12.34%.)
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