coach cakes is a local bakery. Price and cost information as follows. Cove\'s Ca

Question

coach cakes is a local bakery. Price and cost information as follows.

Cove's Cakes is a local bakery. Price and cost information follows $13.71 Price per cake Variable cost per cake Ingredients Direct labor Overhead (box, etc.) 2.29 1.18 0.29 $4,676.50 Fixed cost per month 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.) Cakes Break-Even Units Break-Even Sales Dollars 2. Determine the bakery's margin of safety if it currently sells 530 cakes per month. (Round your intermediate calculations to 2 decimals. Round the break even units and final answer to nearest whole dollai.) Margin of Safety

Explanation / Answer

a) Contribution margin per unit =13.71- (2.29+1.18+0.29)=9.95 per cakes

Break even point = 4676.50/9.95 = 470 Cakes

Break even dollar sales = 470*13.71 = 6443.70

b) Margin of safety = 530-470 = 60 cakes

Margin of safety sales = 60*13.71 = $822.60

c) Target sales units = (2100+4676.50)/9.95 = 681 cakes

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