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

Price per cake

$

13.31

Variable cost per cake

Ingredients

2.28

Direct labor

1.10

Overhead (box, etc.)

0.21

Fixed cost per month

$

4,568.40

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 $1.70 per cake.

Break-Even Point

cakes

b. Fixed costs increase by $535 per month.

Break-Even Point

cakes

c. Variable costs decrease by $0.35 per cake.

Break-Even Point

cakes

d. Sales price decreases by $0.40 per cake.

Break-Even Point

cakes

2. Assume that Cove sold 495 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 8 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

%