Coves Cakes is a local bakery. Price and cost information follows:

Price per cake - $14.71

Variable Cost per cake

Ingredients - $2.30

Direct Labor - $1.04

Overhead (box, etc) - $0.25

Fixed Cost per month - $3,780.80

Determine Coves break-even point in units and sales dollars. (Round your Break-Even Units answer to the nearest whole number. Round your other intermediate calculations and sales dollars answer to 2 decimal places.)

Determine the bakerys margin of safety if it currently sells 420 cakes per month. (Round your intermediate calculations to 2 decimals. Round the break-even units and final answer to nearest whole dollar.)

Determine the number of cakes that Cove must sell to generate $1,000 in profit. (Round your intermediate calculations to 2 decimal places and final answer to nearest whole number.)

2. Coves Cakes is a local bakery. Price and cost information follows:

Price per cake - $14.71

Variable cost per cake

Ingredients - $2.30

Direct labor - $1.07

Overhead (box, etc) - $0.26

Fixed cost per month - $4,432

Calculate Coves new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.)

a. Sales price increases by $1.80 per cake.

b. Fixed costs increase by $460 per month.

c. Variable costs decrease by $0.33 per cake.

d. Sales price decreases by $0.60 per cake.

Assume that Cove sold 425 cakes last month. Calculate the companys degree of operating leverage. (Do not round intermediate calculations. Round your answer to 4 decimal places.)

Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 9 percent increase in sales revenue.(Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

3. Danas Ribbon World makes award rosettes. Following is information about the company:

Variable cost per rosette - $2.50

Sales price per rosette - $6

Total fixed costs per month - $7,000

. If Danas sells 2,160 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales. (Round your Margin of Safety percentage to two decimal places (i.e. .1234 should be entered as 12.34%).

Using the degree of operating leverage, calculate the change in Danas profit if unit sales drop to 1,836 units. Confirm this by preparing a new contribution margin income statement. (Round your intermediate calculations to 4 decimal places and final answer to 2 decimal places. (i.e. .1234 should be entered as 12.34%.)) Degree of operating leverage = 13.5000

4. Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows:

	Before Automation	After Automation
Sales Revenue	$189,000	$189,000
Less: Variable cost	$103,000	$43,000
Contribution Margin	$86,000	$146,000
Less: fixed cost	$16,000	$62,000
Net operating income	$70,000	$84,000

Calculate Lobster Traps break-even sales dollars before and after automation. (Round your contribution margin ratio to 4 decimal places and final answers to 2 decimal places.)

Compute Lobster Traps degree of operating leverage before and after automation. (Round your answers to 4 decimal places.)

5. Russell Preston delivers parts for several local auto parts stores. He charges clients 1.20 per mile driven. Russell has determined that if he drives 2,700 miles in a month, his average operating cost is $0.80 per mile. If he drives 3,700 miles in a month, his average operating cost is $0.70 per mile. Russell has used the high-low method to determine that his monthly cost equation is: total cost = $1,540.00 + $0.43 per mile.

Determine how many miles Russell needs to drive to break even.

Assume Russell drove 2,500 miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month.

Determine how many miles Russell must drive to earn $1,925.00 in profit.

Prepare a contribution margin income statement assuming Russell drove 2,500 miles last month. (Enter your answers rounded to 2 decimal places.)

Use the above information to calculate Russells degree of operating leverage. (Round your answer to the 2 decimal places.)

6. Hawk Homes, Inc., makes one type of birdhouse that it sells for $30.80 each. Its variable cost is $14.10 per house, and its fixed costs total $14,395.40 per year. Hawk currently has the capacity to produce up to 2,300 birdhouses per year, so its relevant range is 0 to 2,300 houses.

Prepare a contribution margin income statement for Hawk assuming it sells 1,110 birdhouses this year. (Enter your answers rounded to 2 decimal places.)

Without any calculations, determine Hawks total contribution margin if the company breaks even. (Enter your answers rounded to 2 decimal places.)

Calculate Hawks contribution margin per unit and its contribution margin ratio. (Round your answers to 2 decimal places. (i.e. .1234 should be entered as 12.34%.))

Calculate Hawks break-even point in number of units and in sales revenue. (Round your "Sales Revenue" answer to 2 decimal places and "Unit" answer to the nearest whole number.)

Suppose Hawk wants to earn $20,000 this year. Determine how many birdhouses it must sell to generate this amount of profit. (Round up to the next whole number.)