Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $40 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows: Sales revenue $840,000 Variable expenses 630,000 Contribution margin 210,000 Fixed expenses 112,000 Operating income $ 98,000 a.What is FirstCakes' contribution margin per unit? b.What is FirstCakes' monthly breakeven point in units? c.What is FirstCakes' contribution margin ratio? d.What is FirstCakes' monthly breakeven point in sales dollars?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $40 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows:
| Sales revenue |
$840,000
|
| Variable expenses |
630,000
|
| Contribution margin |
210,000
|
| Fixed expenses |
112,000
|
| Operating income |
$ 98,000
|
a.What is FirstCakes' contribution margin per unit?
b.What is FirstCakes' monthly breakeven point in units?
c.What is FirstCakes' contribution margin ratio?
d.What is FirstCakes' monthly breakeven point in sales dollars?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 5 images
