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Coves Cakes is a local bakery. Price and cost information follows: Price per cake $ 13.31 Variable cost per cake Ingredients 2.29 Direct labor 1.08
Coves Cakes is a local bakery. Price and cost information follows: Price per cake $ 13.31 Variable cost per cake Ingredients 2.29 Direct labor 1.08 Overhead (box, etc.) 0.15 Fixed costs per month 2,839.10 Required: Calculate Coves new break-even point under each of the following independent scenarios: Sales price increases by $1.80 per cake. Fixed costs increase by $450 per month. Variable costs decrease by $0.27 per cake. Sales price decreases by $0.50 per cake. Assume that Cove sold 305 cakes last month. Calculate the companys degree of operating leverage. Using the degree of operating leverage, calculate the change in profit caused by a 13 percent increase in sales revenue
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