E6-4 (Algo) Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes is a local bakery. Price and cost information follows: Price per cake $ 13.01 Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed costs per month 2.21 1.02 0.17 3,940.10 Required: 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 $530 per month. c. Variable costs decrease by $0.36 per cake. d. Sales price decreases by $0.30 per cake. 2. Assume that Cove sold 425 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 8 percent increase in sales revenue.
E6-4 (Algo) Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5] Cove's Cakes is a local bakery. Price and cost information follows: Price per cake $ 13.01 Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed costs per month 2.21 1.02 0.17 3,940.10 Required: 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 $530 per month. c. Variable costs decrease by $0.36 per cake. d. Sales price decreases by $0.30 per cake. 2. Assume that Cove sold 425 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 8 percent increase in sales revenue.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![E6-4 (Algo) Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4,
6-5]
Cove's Cakes is a local bakery. Price and cost information follows:
Price per cake
Variable cost per cake
Ingredients
Direct labor
Overhead (box, etc.)
Fixed costs per month
$ 13.01
2.21
1.02
0.17
3,940.10
Required:
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 $530 per month.
c. Variable costs decrease by $0.36 per cake.
d. Sales price decreases by $0.30 per cake,
2. Assume that Cove sold 425 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 8 percent increase in sales revenue.
Complete this question by entering your answers in the tabs below.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F606d1fb0-e45b-4016-b225-8946a77e0ed9%2Ff6d21444-f9de-4498-8a06-66ad28f9988a%2Fsddrpbs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:E6-4 (Algo) Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4,
6-5]
Cove's Cakes is a local bakery. Price and cost information follows:
Price per cake
Variable cost per cake
Ingredients
Direct labor
Overhead (box, etc.)
Fixed costs per month
$ 13.01
2.21
1.02
0.17
3,940.10
Required:
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 $530 per month.
c. Variable costs decrease by $0.36 per cake.
d. Sales price decreases by $0.30 per cake,
2. Assume that Cove sold 425 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 8 percent increase in sales revenue.
Complete this question by entering your answers in the tabs below.
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