Izzy Ice Cream has the following price and cost information: Price per 2-scoop sundae Variable costs per sundae: Ingredients Direct labor Overhead Fixed costs per month $ 5.00 1.35 0.45 0.20 $ 9,000

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CE
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Izzy Ice Cream has the following price and cost information:
Price per 2-scoop sundae
Variable costs per sundae:
Ingredients
Direct labor
Overhead
Fixed costs per month
Required:
1. Determine Izzy's break-even point in units and sales dollars.
2. Determine how many sundaes must be sold to generate a profit of $18,000.
$5.00
3. Calculate Izzy's new break-even point in units for each of the following independent scenarios:
a. Sales price decreases by $0.50.
b. Fixed costs decrease by $300 per month.
c. Variable costs increase by $0.50 per sundae.
4. Based on the original information, how many sundaes must Izzy sell to generate a profit of $50,000, if sales price increases by
$0.50 and variable costs increase by $0.30?
Required 1 Required 2
1.35
0.45
0.20
$ 9,000
Complete this question by entering your answers in the tabs below.
Break-even units
Break-even sales
Required 3 Required 4
Determine Izzy's break-even point in units and sales dollars.
sundaes
< Required 1
Required 2 >
Transcribed Image Text:Izzy Ice Cream has the following price and cost information: Price per 2-scoop sundae Variable costs per sundae: Ingredients Direct labor Overhead Fixed costs per month Required: 1. Determine Izzy's break-even point in units and sales dollars. 2. Determine how many sundaes must be sold to generate a profit of $18,000. $5.00 3. Calculate Izzy's new break-even point in units for each of the following independent scenarios: a. Sales price decreases by $0.50. b. Fixed costs decrease by $300 per month. c. Variable costs increase by $0.50 per sundae. 4. Based on the original information, how many sundaes must Izzy sell to generate a profit of $50,000, if sales price increases by $0.50 and variable costs increase by $0.30? Required 1 Required 2 1.35 0.45 0.20 $ 9,000 Complete this question by entering your answers in the tabs below. Break-even units Break-even sales Required 3 Required 4 Determine Izzy's break-even point in units and sales dollars. sundaes < Required 1 Required 2 >
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