Part $2$: Contribution Margin and Break$-$even Analysis

In trying to determine how many custom wedding cakes that he needs to sell to break$-$even or make a profit,

Mr$.$ Suncat has requested that you answer several questions for him.

a$.$ Define and explain the purpose of a contribution margin.

b$.$ What is meant by contribution margin ratio and how might Mr$.$ Suncat find this ratio useful in making

business decisions?

c$.$ Using the above information, calculate the following items, being sure to show all calculations and

clearly labeling your answers:

Contribution margin per unit

Contribution margin ratio $($do not round your answer$)$

Break$-$even point in units

Break$-$even point in dollars

d$.$ Explain what happens at the break$-$even point and why companies do not want to remain at the

break$-$even point.

e$.$ How many Custom wedding cakes does Suncat Cake Shop need to sell in order to realize a target

profit

of $$50,000?$ Show all calculations and clearly label your answer.

f$.$ What dollar sales will Suncat Cake Shop need to generate in order to realize a target profit of $$50,000?$

Show all calculations and clearly label your answer.