Managerial Accounting
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ISBN: 9781260195408
Author: Whitecotton
Publisher: MCG
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Textbook Question
Chapter 6, Problem 3E
Determining Break-Even Point, target Profit. Margin of Safety
Cove’s Cakes is a local bakery. Price and cost information follows
1. Determine Cove’s breakeven point in units and sales dos.
2. Determine the bakery’s margin of safety if currently sells 450 cakes per month.
3. Determine the number of cakes that Cove must sell to generate $2,000 in profit.
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Students have asked these similar questions
Cove’s Cakes is a local bakery. Price and cost information follows:
Price per cake
$
13.61
Variable cost per cake
Ingredients
2.22
Direct labor
1.16
Overhead (box, etc.)
0.23
Fixed cost per month
$
3,500.00
Required:
1. Determine Cove’s break-even point in units and sales dollars.
2. Determine the bakery’s margin of safety if it currently sells 430 cakes per month.
3. Determine the number of cakes that Cove must sell to generate $1,300 in profit.
Robert's
Repair Shop has a monthly target profit of
$21,000.
Variable costs are
40%
of sales, and monthly fixed costs are
$27,000.
Requirements
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express
Robert's
margin of safety as a percentage of target sales.
3. Why would
Robert's
management want to know the shop's margin of safety?
Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
Select the labels and enter the amounts to compute
Robert's
Repair Shop's monthly margin of safety in dollars.
(1)
-
(2)
=
Margin of safety in dollars
-
=
Requirement 2. Express
Robert's
margin of safety as a percentage of target sales. (Enter your answer as a whole percent.)
The margin of safety as a percentage of target sales is:
%.
Requirement 3. Why would
Robert's
management want to know the shop's margin of safety?…
Computing margin of safety
Robbie’s Repair Shop has a monthly target profit of $31,000. Variable costs are 20% of Sales, and monthly fixed costs are $19,000.
Requirements
Compute the monthly margin of Safety in dollars if the shop achieves its income goal.
Express Robbie’s margin of safety, as a percentage of margin Sales.
Why would Robbie’s management want to know the shop’s margin of safety?
Chapter 6 Solutions
Managerial Accounting
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