Cove's Cakes is a local bakery. Price and cost information follows: $ 14.71 Price per...
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Cove's Cakes is a local bakery. Price and cost information follows: $ 14.71 Price per cake Variable cost per cake Ingredients Direct labor Overhead (box, etc.) Fixed cost per month 2.34 1.19 0.12 $4,866.40 Required: 1. Calculate Cove's new break-even point under each of the following independent scenarios: a. Sales price increases by $1.90 per cake. b. Fixed costs increase by $505 per month c. Variable costs decrease by $0.30 per cake, d. Sales price decreases by $0.50 per cake, 2. Assume that Cove sold 450 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 7 percent increase in sales revenue
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