Question

View Policies Show Attempt History Karen White owns and operates CraneCakes, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $40 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 $808,000 606,000 202,000 111,000 $ 91,000 (a) x Your answer is incorrect. How many cakes will Karen White have to sell if she wants to earn $147,000 in operating income each month? 5950 cakes e Textbook and Media Assistance Used Attempts: 3 of 12 used 17

Answer 1

solution's contribution margin ratio – contribution margin sales revenue 209000 80 8000 = 0.25 or 25% Desired Operating Income = 147000 Required sales to earn desired operatêng Income = fixed cost + Desired operating income contribution margin patio 111000 + 1u7000 0.25 Required sales = 1032000 So, Number of cakes to sell = $ 1032000 $40 = 25800