Question

4 Cove's Cakes is a local bakery. Price and cost Information follows: $ 13.91 1.36 points Price per cake Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed cost per month Skipped 2.35 1.19 0.25 $4,351.60 eBook Print References Required: 1. Determine Cove's break-even point in units and sales dollars. 2. Determine the bakery's margin of safety if it currently sells 490 cakes per month. 3. Determine the number of cakes that Cove must sell to generate $2,000 in profit. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 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.) Cakes Break-Even Units Break-Even Sales Dollars < Required 1 Required 2 >

Answer 1

Solution :

Contrubution per Unit = Sale Price - Variable Cost

= $ 13.91 - $ 2.35 - $ 1.19 - $ 0.25

= $ 10.12 per Unit

Requirement 1 :

Breakeven Unit = Fixed Cost / Contrubution per Unit

= $ 4,351.60 / $ 10.12

= 430 Units

Breakeven Dollars = Breakeven Units * Sale Price

= 430 * $ 13.91

= $ 5,981.30

Requirement 2 :

MOS Units = Total Units - Breakeven Unit

= 490 - 430

= 60 Units

MOS ($ ) = MOS Units * Sale Price per Unit

= 60 * $ 13.91

= $ 835

Requirement 3 :

Units to earn Target Profit = (Fixed Cost + Desired Profit) / CM per Unit

= ($ 4,351.60 + $ 2,000) / $ 10.12

= 628 Units

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