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natali 33 [55]
3 years ago
15

If the maximum operating capacity of the Gobblecakes bakery is 12,000 cupcakes annu- ally, determine the break-even volume as a

percentage of that capacity. Gobblecakes is a bakery that specializes in cupcakes. The annual fixed cost to make cupcakes is $18,000. The variable cost including ingredients and labor to make a cupcake is $0.90. The bakery sells cupcakes for $3.20 apiece. If the bakery sells 12,000 cupcakes annually, determine the total cost, total revenue, and profit.
Business
1 answer:
bixtya [17]3 years ago
8 0

Answer:

(a) 65.22%

(b) $28,800; $38,400; $9,600

Explanation:

Total cost:

= variable cost + fixed cost

= (12,000 × 0.90) + 18,000

= 28,800

Total Revenue:

= quantity of cupcakes sold × selling price of each cupcake

= 12,000 × 3.2

= 38,400

Profit:

= Total revenue - Total cost

= 38,400 - 28,800

= 9,600

Break even sales:

= Fixed cost ÷ contribution margin

= 18,000 ÷ (3.2 - 0.90)

= 7,826.087

Break even volume in capacity:

= Break even sales ÷ Cupcakes produced

= 7,826.087 ÷ 12,000

= 65.22%

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Answer:

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Explanation:

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The impact of both increases in fixed costs and contribution margin cannot be determined except if more details is provided which will give further guidance regarding which of the two increased at a higher rate compared to the other.

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