Izzy Ice Cream has the following price and cost information: Price per 2-scoop sundae $ 5.00 Variable cost per sundae: Ingredients 1.35 Direct labor 0.45 Overhead 0.20 Fixed cost per month $ 5,400 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 $10,800. 3. Calculate Izzy’s new break-even point 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 $26,000, if sales price increases by $0.50 and variable costs increase by $0.30?
Izzy Ice Cream has the following price and cost information: Price per 2-scoop sundae $ 5.00 Variable cost per sundae: Ingredients 1.35 Direct labor 0.45 Overhead 0.20 Fixed cost per month $ 5,400 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 $10,800. 3. Calculate Izzy’s new break-even point 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 $26,000, if sales price increases by $0.50 and variable costs increase by $0.30?
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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Question
Izzy Ice Cream has the following price and cost information:
| Price per 2-scoop sundae | $ | 5.00 |
| Variable cost per sundae: | ||
| Ingredients | 1.35 | |
| Direct labor | 0.45 | |
| 0.20 | ||
| Fixed cost per month | $ | 5,400 |
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 $10,800.
3. Calculate Izzy’s new break-even point 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 $26,000, if sales price increases by $0.50 and variable costs increase by $0.30?
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