Question

8 Izzy Ice Cream has the following price and cost Information: $ 5.ee 1.36 points Price per 2-scoop sundae Variable cost per sundae: Ingredients Direct labor Overhead Fixed cost per month 1.35 0.45 2.2e $ 7,200 eBook Print References Required: 1. Determine Izzy's break-even point in units and sales dollars. 2. Determine how many sundaes must be sold to generate a profit of $14,400. 3. Calculate Izzy's new break-even point for each of the following Independent scenarios: a. Sales price decreases by $0.50. b. Fixed costs decrease by $300 per month. c. Variable costs Increase by $0.50 per sundae. 4. Based on the original Information, how many sundaes must Izzy sell to generate a profit of $38,000, if sales price Increases by $0.50 and variable costs Increase by $0.30?

Answer 1

2.5 Break even (c) Variable costs increase by $8.50 3. Calculation of new break-even point: (a) sales price decreases by 80:50: New selling price: $4,5 Contribution: 4:5-2 = $2.5 Break-even point: $7200 - 2880 sundaes (6) Fined costs decreases by $300 per month point $ 1200-$300 - 2300 sundaes $3 New contribution: $5 - $2.5 = $25 even point $7200, 2880 sundaes 4. Target sales: Selling price: $55, Variable cost = $2:30 New contribution = $3.2 Target sales in units: Fixed costs + Target profit Contribution per uni $7200+ B 38000 Break even 2.5 183.2 = 14125 Sundaes