Exercise 3-7 (Part Level Submission) Julianna Abdallah owns and operates FirstCa

Question

Exercise 3-7 (Part Level Submission) Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $64 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows: Sales revenue $1,121,280 840,960 280,320 134,720 Variable expenses Contribution margin Fixed expenses Operating income 145,600 (a) How many cakes will Julianna Abdallah have to sell if she wants to earn $179,392 in operating income each month? cakes LINK TO TEXT LINK TO VIDEO

Explanation / Answer

Suppose that cake will be sold as "X" Now, current cake sold = (1,121,280/64) = 17,520 And, variable cost per cake =(840,960/17,520) = 48 Therefore 64X-48X-134,720 = 179,392 16X = 179,392+134,720 16X = 314,112 X = 314,112 / 16 X =19,632 cakes

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