EXERCISE 5-11. [LO 1] During the year,Summit produces 40,000 snow shovels and se

Question

EXERCISE 5-11. [LO 1] During the year,Summit produces 40,000 snow shovels and sells 37,000
snow shovels.
Required
What is the value of ending inventory using full costing?

EXERCISE 4-11. CVP Analysis [LO 3] Gabby’s Wedding Cakes creates elaborate wedding cakes. Each cake sells for $600.The variable cost of making the cakes is $250,and the fixed cost per month is $7,700.
Required
a. Calculate the break-even point for a month in units.
b. How many cakes must be sold to earn a monthly profit of $10,000?

Explanation / Answer

4-11: If each cake sells for $600 and the VarCost is $250, then the Contribution Margin is $350 per cake. To get break even point, divide CM into total fixed costs. 7700 / 350 = 22 Cakes to break even. To make a profit of $10,000, just add the desired profit to the numerator and so the same calculation. 17700 / 350 = ~51 Cakes

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