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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer 1,2,3
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.
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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