REQUIRED 2:

Assume that Cove sold 380 cakes last month. Calculate the companys degree of operating leverage. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

	Degree of Operating Leverage

REUIRED 3:

Using the degree of operating leverage, calculate the change in profit caused by a 7 percent increase in sales revenue. (Round your intermediate values to 2 decimal places. (i.e. 0.1234 should be entered as 12.34%.))

Effect on Profit

%

E6-4 (Algo) Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake Ingredients $ 14.71 2.35 Direct labor 1.09 Overhead (box, etc.) Fixed cost per month 0.11 $4,017.60 Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: a. Sales price increases by $1.20 per cake. b. Fixed costs increase by $500 per month c. Variable costs decrease by $0.29 per cake. d. Sales price decreases by $0.40 per cake 2. Assume that Cove sold 380 cakes last month. Calculate the company's degree of operating leverage. 3. Using the degree of operating leverage, calculate the change in profit caused by a 7 percent increase in sales revenue. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate Cove's new break-even point under each of the following independent scenarios: (Round your answers to the nearest whole number.) Break-Even Point Sales price increases by $1.20 per cake 1a. cakes 1b. Fixed costs increase by $500 per month cakes Variable costs decrease by $0.29 per cake. 1c. cakes 1d. Sales price decreases by $0.40 per cake cakes > Required 1 Required 2