Cove\'s Cakes is a local bakery. Price and cost information follows: Price per c

Question

Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake S 14.31 Ingredients Direct labor Overhead (box, etc.) 2.21 1.17 0.19 $4,188.60 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 intermediate calculations and sales dollars answer to 2 decimal places.) Break-Even Units Cakes Break-Even Sales Dollars 2. Determine the bakery's margin of safety if it currently sells 450 cakes per month. (Round your intermediate calculations to 2 decimals. Round the break-even units and final answer to nearest whole dollar.) 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.) Sales Units Cakes

Explanation / Answer

Break even point units = Fixed cost/contribution margin per unit

                                = 4188.60/10.74

Break even point units = 390 units

Break even point dollars = 390*14.31 = 5580.90

b) Margin of safety = 450-390 = 60 cakes

Margin of safety dollars = 60*14.31 = 858.60 or 859

c) Target sales units = (4188.60+1600)/10.74 = 539 cakes

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