Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake Ingredients Direct labor $ 13.21 2.25 1.04 Overhead (box, etc.) 0.11 Fixed costs per month 3,335.40 ok Required: ences 1. Calculate Cove's new break-even point under each of the following independent scenarios: a. Sales price increases by $1.60 per cake. b. Fixed costs increase by $465 per month. c. Variable costs decrease by $0.38 per cake. d. Sales price decreases by $0.30 per cake. 2. Assume that Cove sold 355 cakes last month. Calculate the company's degree of operating leverage. 3. Using the degree of operating leverage, calculate the change in profit caused by a 14 percent increase in sales revenue. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that Cove sold 355 cakes last month. Calculate the company's degree of operating leverage. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Degree of Operating Leverage
Cove's Cakes is a local bakery. Price and cost information follows: Price per cake Variable cost per cake Ingredients Direct labor $ 13.21 2.25 1.04 Overhead (box, etc.) 0.11 Fixed costs per month 3,335.40 ok Required: ences 1. Calculate Cove's new break-even point under each of the following independent scenarios: a. Sales price increases by $1.60 per cake. b. Fixed costs increase by $465 per month. c. Variable costs decrease by $0.38 per cake. d. Sales price decreases by $0.30 per cake. 2. Assume that Cove sold 355 cakes last month. Calculate the company's degree of operating leverage. 3. Using the degree of operating leverage, calculate the change in profit caused by a 14 percent increase in sales revenue. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that Cove sold 355 cakes last month. Calculate the company's degree of operating leverage. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Degree of Operating Leverage
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cove's Cakes is a local bakery. Price and cost information follows:
Price per cake
Variable cost per cake
Ingredients
Direct labor
$ 13.21
2.25
1.04
Overhead (box, etc.)
0.11
Fixed costs per month
3,335.40
ok
Required:
ences
1. Calculate Cove's new break-even point under each of the following independent scenarios:
a. Sales price increases by $1.60 per cake.
b. Fixed costs increase by $465 per month.
c. Variable costs decrease by $0.38 per cake.
d. Sales price decreases by $0.30 per cake.
2. Assume that Cove sold 355 cakes last month. Calculate the company's degree of operating leverage.
3. Using the degree of operating leverage, calculate the change in profit caused by a 14 percent increase in sales revenue.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Assume that Cove sold 355 cakes last month. Calculate the company's degree of operating leverage.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Degree of Operating Leverage
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