Coves Cakes is a local bakery. Price and cost information follows: Price per cake $ 14.71 Variable cost per cake Ingredients 2.22 Direct labor 1.10 Overhead (box, etc.) 0.21 Fixed cost per month $ 4,024.80

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 $1.80 per cake.

Break-Even Point

cakes

b. Fixed costs increase by $480 per month.

Break-Even Point

cakes

c. Variable costs decrease by $0.43 per cake.

Break-Even Point

cakes

d. Sales price decreases by $0.40 per cake.

Break-Even Point

cakes

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 4 decimal places.)

Degree of Operating Leverage

3. Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 11 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

Effect on Profit

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