1)
Break even in unit = fixed cost / contribution margin
= 4,411.40 / 9.59
= 460 units
Contribution margin = selling price - variable cost
Break even in dollar = break even in unit x selling price
= 460 x 13.21
= $6,076.6
2. Margin of safety = actual sale - break even point
= 540 - 460
= 80 cakes × 13.21 = $1,056.8
3. Target sale = fixed cost + targeted profit / contribution margin
= 4,411.40 + 2,700 / 9.59
= 742 cakes
E6-3 Determining Break-Even Point, Target Profit, Margin of Safety [LO 6-1, 6-2, 6-3] Cove's Cakes is...
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