Cove’s Cakes is a local bakery. Price and cost information follows:

Required:
1. Calculate Cove’s new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.)

a. Sales price increases by $1.50 per cake.

Break Even Point _______ Cakes



b. Fixed costs increase by $485 per month.

Break Even Point _______ Cakes


c. Variable costs decrease by $0.39 per cake.

Break Even Point _______ Cakes



d. Sales price decreases by $0.70 per cake.

Break Even Point _______ Cakes



2. Assume that Cove sold 315 cakes last month. Calculate the company’s degree of operating leverage. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Degree of Operating Leverage: ________



3. Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 8 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

Effect on Profit _______ %

12. Calculate the fictional gain or loss of industry resulting from price ceiling and price floor

Cove’s Cakes is a local bakery. Price and cost information follows: Price per cake $ 14.71 Variable cost per cake Ingredients 2.22 Direct labor 1.10 Overhead (box, etc.) 0.21 Fixed cost per month $ 4,024.80

Required: 1. Calculate Cove’s new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.)

a. Sales price increases by $1.80 per cake.

b. Fixed costs increase by $480 per month.

c. Variable costs decrease by $0.43 per cake.

d. Sales price decreases by $0.40 per cake.

2. Assume that Cove sold 380 cakes last month. Calculate the company’s degree of operating leverage. (Do not round intermediate calculations. Round your answer to 4 decimal places.)

3. Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 11 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

describe the difference between providers as price-setters and providers as price-takers and how this difference affects pricing

Select a company and determine its current stock price. Compare the current price to its recent activity and to at least one other similar company in the same industry or line of business. Discuss possible reasons for increases or decreases in your stock's price and its standing with its competitor.

Explain the differences among price elasticity, mid-point elasticity; Income and Cross Price elasticities.

A shortage results when a a. nonbinding price ceiling is removed from market. b. binding price ceiling is removed from a market. c. nonbining price celing is imposed on a market. d. binding price celing is imposed on a market.

Consider an option on a non-dividend-paying stock when the stock price is $30, the exercise price is $29, the risk-free interest rate is 5% per annum, the volatility is 25% per annum, and the time to maturity is four months.

1. What is the price of the option if it is a European call?
2. What is the price of the option if it is an American call?
3. What is the price of the option if it is a European put?
4. Verify that put-call parity holds. (Hint: Substitute the European put and call prices into the put call parity equation and demonstrate that the right hand side of the equation is equal to the left hand side of the equation.)

Cove’s Cakes is a local bakery. Price and cost information follows:

Required:

1. Calculate Cove’s new break-even point under each of the following independent scenarios:

a. Sales price increases by $1.60 per cake.

b. Fixed costs increase by $545 per month.

c. Variable costs decrease by $0.42 per cake.

d. Sales price decreases by $0.60 per cake.

2. Assume that Cove sold 395 cakes last month. Calculate the company’s degree of operating leverage.

3. Using the degree of operating leverage, calculate the change in profit caused by a 5 percent increase in sales revenue.

Cove’s Cakes is a local bakery. Price and cost information follows:

Required:

1. Determine Cove’s break-even point in units and sales dollars.

2. Determine the bakery’s margin of safety if it currently sells 370 cakes per month.

3. Determine the number of cakes that Cove must sell to generate $1,900 in profit.