Question

# Cove’s Cakes is a local bakery. Price and cost information follows: Price per cake \$ 14.11...

Cove’s Cakes is a local bakery. Price and cost information follows:

Price per cake \$ 14.11
Variable cost per cake
Ingredients 2.29
Direct labor 1.06
Fixed cost per month \$ 4,894.40

Required:
1.
Determine Cove’s break-even point in units and sales dollars. (Round your Break-Even Units answer to the nearest whole number. Round your other intermediate calculations and sales dollars answer to 2 decimal places.)

 Break-Even Units Cakes Break-Even Sales Dollars

2. Determine the bakery’s margin of safety if it currently sells 540 cakes per month. (Round your intermediate calculations to 2 decimals. Round the break-even units and final answer to nearest whole dollar.)

 Margin of Safety

3. Determine the number of cakes that Cove must sell to generate \$2,500 in profit. (Round your intermediate calculations to 2 decimal places and final answer to nearest whole number.)

 Target Sales Units Cakes

1. Determine Cove’s break-even point in units and sales dollars.

Break even point (units) = 4894.40/(14.11-3.47) = 460 Cakes

Break even point (dollar sales) = 460*14.11 = 6490.60

2. Determine the bakery’s margin of safety if it currently sells 540 cakes per month.

Margin of safety = Actual sales-break even sales

= 540-460

Margin of safety = 80 Cakes

3. Determine the number of cakes that Cove must sell to generate \$2,500 in profit.

Target units sales = (4894.40+2500)/(14.11-3.47) = 695 Cakes

#### Earn Coins

Coins can be redeemed for fabulous gifts.