Cove’s Cakes is a local bakery. Price and cost information follows: Price per cake$13.81 Variable cost per cake Ingredients 2.33 Direct labor 1.19 Overhead (box, etc.) 0.16 Fixed cost per month$2,937.70 Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 8 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

Degree of operating leverage calculated by dividing the percentage change in operating profit by the…

Answered: ove’s Cakes is a local bakery. Price…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

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	$	13.81
Variable cost per cake
Ingredients		2.33
Direct labor		1.19
Overhead (box, etc.)		0.16
Fixed cost per month	$	2,937.70

Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 8 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

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