E6-3 Determining Break-Even Point, Target Profit, Margin of Safety [LO 6-1, 6-2, 6-3]

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

Price per cake	$	13.31
Variable cost per cake
Ingredients		2.18
Direct labor		1.01
Overhead (box, etc.)		0.22
Fixed cost per month	$	3,465.00

1. Determine Coves break-even point in units and sales dollars. (Round your Break-Even Units answer to the nearest whole number. Round your other intermediate calculations and sales dollars answer to 2 decimal places.)

Break-Even Units		Cakes
Break-Even Sales Dollars

2. Determine the bakerys margin of safety if it currently sells 400 cakes per month. (Round your intermediate calculations to 2 decimals. Round the break-even units and final answer to nearest whole dollar.)

Margin of Safety

3. Determine the number of cakes that Cove must sell to generate $1,600 in profit. (Round your intermediate calculations to 2 decimal places and final answer to nearest whole number.)

Target Sales Units

Cakes