Question
Coves Cakes is a local bakery. Price and cost information follows: Price per cake $ 14.81 Variable cost per cake Ingredients 2.34 Direct labor 1.03
Coves Cakes is a local bakery. Price and cost information follows:
Price per cake | $ | 14.81 | |
Variable cost per cake | |||
Ingredients | 2.34 | ||
Direct labor | 1.03 | ||
Overhead (box, etc.) | 0.21 | ||
Fixed cost per month | $ | 4,042.80 | |
Required: 1. 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 $1.90 per cake. b. Fixed costs increase by $525 per month. c. Variable costs decrease by $0.35 per cake. d. Sales price decreases by $0.70 per cake. 2. Assume that Cove sold 380 cakes last month. Calculate the companys degree of operating leverage. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 3. Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 12 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))
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