Question

Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $64 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income $994,560 745,920 248,640 132,800 $ 115,840 (a) How many cakes will Julianna Abdallah have to sell if she wants to earn $131,568 in operating income each month? cakes e Textbook and Media Assistance Used e Textbook Video Save for Later Attempts: 0 of 12 used Submit Answer

Answer 1

	Computation of no of cakes to be sold to earn a profit of $ 131,568
	Cell reference	Particulars	Amount $
	A	Sales revenue	994,560
	B	variable cost	745,920
	C=A-B	Contribution margin	248,640
	D	Fixed expenses	132,800
	E=C-D	operating income	115,840
	F	Sale price per unit	64
	G=A/F	No of units sold	15,540
	H=B/G	variable cost per unit	48
	I=F-H	Contribution per unit	16
	No of units to be sold to earn a desired profit=		Desired profit+ fixed cost
			Contribution per unit
	No of units to be sold to earn a desired profit=		131,568+132,800
			16
	No of units to be sold to earn a desired profit=		264,368
			16
	No of units to be sold to earn a desired profit=		16,523
	The company should sell 16,523 units to earn a desired profit of 131,568