Question

Calculate Cove’s new break-even point under each of the following independent scenarios: (Round your answers to the nearest whole number.) a. Sales price increases by $2.00 per cake. b. Fixed costs increase by $520 per month. c. Variable costs decrease by $0.38 per cake. d. Sales price decreases by $0.20 per cake.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

We are not provided with enough information to calculate the break-even point in units, but I will the formula and explanation on each case to solve it:

Break-even point= fixed costs/ contribution margin

a. Sales price increases by $2.00 per cake.

Break-even point= fixed costs/ [(selling price + 2) - unitary variable cost]

b. Fixed costs increase by $520 per month.

Break-even point= (fixed costs + 520)/ contribution margin

c. Variable costs decrease by $0.38 per cake.

Break-even point= fixed costs/ [selling price - (unitary cost - 0.38)]

d. Sales price decreases by $0.20 per cake.

Break-even point= fixed costs/ [(selling price - 0.20) - unitary variable cost]