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Ms. Magan Dah and her sister, Ms. Supla Dah got into the cakes and pastries business almost by accident. Magan, a BSHRM graduate, often bake cakes as gifts for friends. Occasionally, they would set up a booth at a trade fair and sell a few of the cakes. The day came when a buyer for a major department store offered them a contract to produce 1,500 cakes of various flavors for $10,000. The sisters realized that it was time to get down to business. To make bookkeeping simpler, they have priced all the cakes at $8. Variable cost per unit is $6 and they have to rent a facility for $4,000 a month. 1) Calculate the breakeven. 2) Calculate their COGS on the department store order. B) Calculate their Operating Ex enses on the department tore order. -) Calculate their EBIT on the department store order.

Ms. Magan Dah and her sister, Ms. Supla Dah got into the cakes and pastries business almost by accident. Magan, a BSHRM graduate, often bake cakes as gifts for friends. Occasionally, they would set up a booth at a trade fair and sell a few of the cakes. The day came when a buyer for a major department store offered them a contract to produce 1,500 cakes of various flavors for $10,000. The sisters realized that it was time to get down to business. To make bookkeeping simpler, they have priced all the cakes at $8. Variable cost per unit is $6 and they have to rent a facility for $4,000 a month. 1) Calculate the breakeven. 2) Calculate their COGS on the department store order. B) Calculate their Operating Ex enses on the department tore order. -) Calculate their EBIT on the department store order.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ms. Magan Dah and her sister, Ms. Supla Dah got into the cakes and pastries business almost by accident. Magan, a BSHRM graduate, often bake cakes as gifts for friends. Occasionally, they would set up a booth at a trade fair and sell a few of the cakes. The day came when a buyer for a major department store offered them a contract to produce 1,500 cakes of various flavors for $10,000. The sisters realized that it was time to get down to business. To make bookkeeping simpler, they have priced all the cakes at $8. Variable cost per unit is $6 and they have to rent a facility for $4,000 a month. 1) Calculate the breakeven. 2) Calculate their COGS on the department store order. 3) Calculate their Operating Ex enses on the department store order. 4) Calculate their EBIT on the department store order.
Transcribed Image Text:Ms. Magan Dah and her sister, Ms. Supla Dah got into the cakes and pastries business almost by accident. Magan, a BSHRM graduate, often bake cakes as gifts for friends. Occasionally, they would set up a booth at a trade fair and sell a few of the cakes. The day came when a buyer for a major department store offered them a contract to produce 1,500 cakes of various flavors for $10,000. The sisters realized that it was time to get down to business. To make bookkeeping simpler, they have priced all the cakes at $8. Variable cost per unit is $6 and they have to rent a facility for $4,000 a month. 1) Calculate the breakeven. 2) Calculate their COGS on the department store order. 3) Calculate their Operating Ex enses on the department store order. 4) Calculate their EBIT on the department store order.
5) If Supla Dah renegotiates the contract at a price of $10 per cake, compute for total variable cost. 6) If Supla Dah renegotiates the contract at a price of $10 per cake, compute for total fixed cost. 7) If Supla Dah renegotiates the contract at a price of $10 per cake, compute for EBIT. 8)lf the store refuses to pay more than $8.00 per unit but is willing to negotiate quantity, welmat quantity of cakes will result to an EBIT of $4,000?
Transcribed Image Text:5) If Supla Dah renegotiates the contract at a price of $10 per cake, compute for total variable cost. 6) If Supla Dah renegotiates the contract at a price of $10 per cake, compute for total fixed cost. 7) If Supla Dah renegotiates the contract at a price of $10 per cake, compute for EBIT. 8)lf the store refuses to pay more than $8.00 per unit but is willing to negotiate quantity, welmat quantity of cakes will result to an EBIT of $4,000?
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