Cove\'s Cakes is a local bakery. Price and cost information follows: $14.81 Pnce

Question

Cove's Cakes is a local bakery. Price and cost information follows: $14.81 Pnce per cake Vanable cast per cake 2.24 1.07 0.22 $4,399.20 Direct labor Overhead box, e) Fixed cost per month Required: 1. Determine Cove's break-even point in units and sales dollars. (Round your Break-Even Units answer to the nearest whole number. Round your other intermedlate calculations and sales dollars answer to 2 declmal places.) Break-Evern Units Break-Even Sales Dollars Cakes 2. Determine the bakery's margin ot safety if it currently sells 460 cakes per month. (Round your intermediate calculations to 2 decimals. Round the break-even units and final answer to nearest whole dollar.) argin of Safsty 3. Determine the number ot cakes that cove must sell to generate $1,800 in prort. (Round your intermediate calculations to 2 decimal places and final answer to nearest whole number.) l Sales Units Cakes

Explanation / Answer

1. Calculation of Contribution per unit Particulars Amount ($) Sales per unit 14.81 Less: Variable Cost (2.24+1.07+.22) 3.53 Contribution per unit (A) 11.28 Break Even Point ( in units)= Fixed Cost/ Contribution Per unit 4399.20/11.28 390 units     Break Even Point ( in sales)= Break Even Point ( in units)* sales price per unit 390*14.81                                                                               $ 5775.9 2. Margin of safety= Actual sales- BEP sales 460-390 70 units 3. No of units to calculate desired profit Desired profit $ 1800 Let the number of units sold x Then revenue will be 14.81x Variable cost 3.53x now, sales- variable cost-fixed cost = profit i.e 14.81x-3.53x-4399.20     = 1800 11.28x                                         = 6199.2 x                                                  = 550 units No of unit sold                     = 550 units

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---