QUESTION 2 12 Marks Adrianna's Cake Shop creates custom cakes to the residents of Ottawa, Canada. Adrianna, the owner of the business, wants to better understand some of the costs of her business, and has provided the below income statement for the year: Sales (1000 cakes) 75,000 Variable costs to produce 55,000 Contribution Margin 20,000 Rent and Utilities for the shop 10,000 Operating Income 10,000 Income Tax Expense (10%) 1000 Net Income 9,000 Required Adrianna wants to know the following about her business: A) What is her break-even point in cakes (units) sold? B) What is the Cake Shop's Margin of Safey in dollars? C) Adrianna wants to run a special promotion to sell a new specialty red velvet cake she plans to sell. She wants to discount all cakes sold by 5%. Variable costs would increase by $2.5 per unit, but sales would increase by 30%. The advertising for this would cost $5000. Should Adrianna run this promotion? Use incremental analysis to determine the incremental income/loss