Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 10, Problem 1TP
Seda Sarkisian makes wedding cakes from her home. A customer has requested two duplicate wedding cakes: one for the wedding and one to be frozen for their anniversary. The couple has offered $400 for both cakes instead of $500 ($250 each). The cost information to make one cake is shown.
A. What is the cost for the first cake?
B. What cost would not be included in the second cake?
C. What is the cost of the second cake?
D. What would be the total cost of this order if the offer was accepted?
E. How much profit will Seda be recording for this special order?
F. If your company policy is to always have a 15% profit on all order, would you still accept this order?
G. If you would not accept the order, what price would you negotiate?
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Sara makes wedding cakes from her home. A customer has requested two duplicate wedding cakes: one for the wedding and one to be frozen for their anniversary. The couple has offered $400 for both cakes instead of $500 ($250 each). The cost information to make one cake is shown in the image.
What is the cost for the first cake?
What cost would not be included in the second cake?
What is the cost of the second cake?
What would be the total cost of this order if the offer was accepted?
How much profit will Sara be recording for this special order?
If your company policy is to always have a 15% profit on all order, would you still accept this order?
If you would not accept the order, what price would you negotiate?
A bakery shop sells a cake. The case must be baked at
the beginning of the day. Each unit of cake costs $28
and can be sold for $59. The shop will donate any
unsold units for charity. The owner of the shop too
many shortages is not desirable. She assumes that
there is a penalty cost of $11 for each unit of shortage.
Suppose the shop bakes 71 units of cakes at the
beginning of the day (before the shop is open). The
demand for the cakes turns out to be 62 units. What is
the profit for the day?
Please show calculation in details
Rosemary is planning to make fancy multi-tiered wedding cakes for the next wedding season. To make the
cakes, she must invest $742 in some special baking pans and tools. To get started, she needs to spend
$2,130 to advertise in the newspaper. She estimates that supplies and materials for each cake will cost $56.
She is planning to set the price for each cake at $561.
a.) Calculate the contribution margin.
b.) Calculate the contribution rate.
(A percentage correct to 2 decimal places.)
c.) Calculate the break-even point in units.
(Round up to the next whole unit.)
d.) Calculate the break-even point in sales dollars.
(Use the rounded number of units.)
Chapter 10 Solutions
Principles of Accounting Volume 2
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