Cove’s Cakes is a local bakery. Price and cost information follows: Price per cake $ 14.61 Variable cost per cake Ingredients 2.15 Direct...

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Accounting

Cove’s Cakes is a local bakery. Price and cost informationfollows:
Price per cake $ 14.61
Variable cost per cake
Ingredients 2.15
Direct labor 1.01
Overhead (box, etc.) 0.16
Fixed cost per month $ 3,274.10
Required:
1. Calculate Cove’s new break-even point undereach of the following independent scenarios:
a. Sales price increases by $1.60 per cake.
b. Fixed costs increase by $465 per month.
c. Variable costs decrease by $0.30 percake.
d. Sales price decreases by $0.70 per cake.
2. Assume that Cove sold 310 cakes last month.Calculate the company’s degree of operating leverage.
3. Using the degree of operating leverage,calculate the change in profit caused by a 9 percent increase insales revenue.

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All working forms part of the answer Requirement 1 A Price per cake 1621 B Total variable cost per cake 332 C A B Contribution margin per cake 1289 D Fixed Cost 327410 E DC Break Even point 254 Answer a A See Answer

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Price per cake	$	14.61
Variable cost per cake
Ingredients		2.15
Direct labor		1.01
Overhead (box, etc.)		0.16
Fixed cost per month	$	3,274.10