Cove’s Cakes is a local bakery. Price and cost information follows: Price per cake $13.51 Variable cost per cake Ingredients 2.24 Direct labor 1.05 Overhead (box, etc.) 0.21 Fixed cost per month $3,203.20 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 410 cakes per month. 3. Determine the number of cakes that Cove must sell to generate $2,500 in profit.
Cove’s Cakes is a local bakery. Price and cost information follows: Price per cake $13.51 Variable cost per cake Ingredients 2.24 Direct labor 1.05 Overhead (box, etc.) 0.21 Fixed cost per month $3,203.20 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 410 cakes per month. 3. Determine the number of cakes that Cove must sell to generate $2,500 in profit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cove’s Cakes is a local bakery. Price and cost information follows:
| Price per cake | $13.51 | ||
| Variable cost per cake | |||
| Ingredients | 2.24 | ||
| Direct labor | 1.05 | ||
| 0.21 | |||
| Fixed cost per month | $3,203.20 | ||
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 410 cakes per month.
3. Determine the number of cakes that Cove must sell to generate $2,500 in profit.
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