E$6-4($Algo$)$ Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage $[$LO $6-4,6-5]$

Cove's Cakes is a local bakery. Price and cost information follows:

Price per cake

Variable cost per cake

Ingredients

Direct labor

Overhead $($box$,$ etc.$)$

Fixed costs per month

$$15\mathrm{.}01$

$2\mathrm{.}27$

$1\mathrm{.}13$

$0\mathrm{.}10$

$5,064\mathrm{.}40$

Required:

Calculate Cove's new break$-$even point under each of the following independent scenarios:

a$.$ Sales price increases by $$1\mathrm{.}30$ per cake.

b$.$ Fixed costs increase by $$490$ per month.

c$.$ Variable costs decrease by $$0\mathrm{.}37$ per cake.

d$.$ Sales price decreases by $$0\mathrm{.}40$ per cake.

Assume that Cove sold $460$ cakes last month. Calculate the company's degree of operating leverage.

Using the degree of operating leverage, calculate the change in profit caused by a $10$ percent increase in sales revenue.

Complete this question by entering your answers in the tabs below.

Required $3$

Calculate Cove's new break$-$even point under each of the following independent scenarios:

Note: Round your answers to the nearest whole number.

a$.$ Sales price increases by $$1\mathrm{.}30$ per cake.

b$.$ Fixed costs increase by $$490$ per month.

c$.$ Variable costs decrease by $$0\mathrm{.}37$ per cake.

d$.$ Sales price decreases by $$0\mathrm{.}40$ per cake.

$\backslash$table$[[,$Break$-$Even Point,$],[1$a$.$ Sales price increases by $$1\mathrm{.}30$ per cake,$496,$cakes$],[1$b$.$ Fixed costs increase by $$490$ per month,$7,243,$cakes$],[1$c$.$ Variable costs decrease by $$0\mathrm{.}37$ per cake.,$426,$cakes$],[1$d$.$ Sales price decreases by $$0\mathrm{.}40$ per cake,$6,660,$cakes$]]$