Bravo Baking identified the costs below to determine its cost of one unit of pro

Question

Bravo Baking identified the costs below to determine its cost of one unit of product and its monthly operating costs. (TCO 4)
Units produced 14,000

Table A Variable Fixed
Materials used in baking bread 2.29
Factory Supervisor Salaries 0.12
Bakers wages 2.29
Rent for Executive Offices 3,000
Sales Commissions 3500
Utilities used in the factory 0.50
Advertising costs 1000
Delivery truck depreciation 400
Depreciation on bake ovens 0.07
Interest on bank loan 500

Total Costs $5.27 $8,400.00


Price Charged per unit $7.77



Part I Enter your solution in the green cells for each of the following:
Using the costs from Table A compute
A) Breakeven units (rounded to 2 decimal places)
B) Break-even sales dollars
C) Contribution Margin
D) Contribution Margin Ratio (%)

Part II Complete the following requirements
A) If Bravo requires a profit of $5,000 how many units must it sell?
B) What is the total revenue from A above?
C) If Bravo actually sells 8,000 units
1) What is the margin of safety in Dollars?
2) What is the margin of safety percentage?






Total Correct

Explanation / Answer

A) Breakeven in Units = Fixed Costs/Contribution Margin Contrib Margin = Price Charged per unit - Variable Cost per unit 7.89 - 5.26 = 2.63 (answer to letter C) $8,400/2.63 = 3,193.92 units B)Breakeven in Dollars = Fixed Costs/Contrib Margin Ratio Contrib Margin ratio = CM/price charged per unit 2.63/7.89 = 33.33 percent (answer to letter D) $8,400/.3333 = $25,202.52 PART II: A) Breakeven in units for profit of $5,000= Fixed Costs + Profit/CM $8,400 + 5,000/2.63 = 5,095.06 units B)Total Revenue per above table A Units produced X Price Charged per unit = 14,000 x 7.89 = $110,460 C) 8,000 units sold 1) Margin of Safety in Dollars = Total Sales - Breakeven Sales Total Sales = 8,000 x 7.89= $63,120.00 Breakeven Sales = 5,095.06 X 7.89 = $40,200.02 Answer:$22,919.98 2) Margin of Safety Percentage = Margin of Safety in $/TotalSales $ $22,919.98/$63,120.00 = 36.31 percent

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