Izzy Ice Cream has the following price and cost information: Price per 2-scoop sundae Variable costs per sundae: Ingredients Direct labor Overhead Fixed costs per month Required: $5.00 1.35 0.45 0.20 $ 5,700 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 $11,400. 3. Calculate Izzy's new break-even point in units 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 $28,000, if sales price increases by $0.50 and variable costs increase by $0.30?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Izzy Ice Cream has the following price and cost information:
Price per 2-scoop sundae
Variable costs per sundae:
Ingredients
Direct labor
Overhead
Fixed costs per month
Required:
$ 5.00
1.35
0.45
0.20
$ 5,700
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 $11,400.
3. Calculate Izzy's new break-even point in units 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 $28,000, if sales price increases by
$0.50 and variable costs increase by $0.30?
Transcribed Image Text:Izzy Ice Cream has the following price and cost information: Price per 2-scoop sundae Variable costs per sundae: Ingredients Direct labor Overhead Fixed costs per month Required: $ 5.00 1.35 0.45 0.20 $ 5,700 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 $11,400. 3. Calculate Izzy's new break-even point in units 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 $28,000, if sales price increases by $0.50 and variable costs increase by $0.30?
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