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Coves Cakes is a local bakery. Price and cost information follows: Price per cake $ 13.11 Variable cost per cake Ingredients 2.20 Direct labor 1.02
Coves Cakes is a local bakery. Price and cost information follows:
Price per cake | $ 13.11 |
---|---|
Variable cost per cake | |
Ingredients | 2.20 |
Direct labor | 1.02 |
Overhead (box, etc.) | 0.11 |
Fixed costs per month | 2,836.20 |
Required:
- Calculate Coves new break-even point under each of the following independent scenarios:
- Sales price increases by $1.90 per cake.
- Fixed costs increase by $525 per month.
- Variable costs decrease by $0.43 per cake.
- Sales price decreases by $0.40 per cake.
- Assume that Cove sold 310 cakes last month. Calculate the companys degree of operating leverage.
- Using the degree of operating leverage, calculate the change in profit caused by a 12 percent increase in sales revenue.
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