Mini Baker products mini cupcakes in various flavors. Suzi Wu opened the shop on January 1 of the current year. The average selling price for each cupcake is $2.50, with some flavors and icings selling for more and some for less. For the first quarter of the current year, the cost of ingredients totaled $28,000; labor to mix, pour, bake, and ice was $35,000; and variable indirect costs, such as supplies, totaled $8,000. The cost of using the baking facility and equipment amounts to $18,000 of fixed product costs each quarter. Selling and administrative costs total $26,000, with 60% variable and 40% fixed. During the first quarter, the company produced and sold 52,000 cupcakes. The income tax rate is 30%.Answer the following questions. Use two decimal places for ratios.
a.Determine the amount of gross margin for the quarter.
b.What is the amount of contribution margin for the quarter? What information does this amount provide to Suzi Wu's bakery? Be specific.
c.Determine the amount of contribution margin ratio for the quarter. What information does it provide to managers? How does it differ from gross margin?
d.Suzi Wu hopes to generate an after-tax target profit of $23,000 per quarter. How much sales revenue must Suzi generate to meet this target?
e.What will happen to the break-even point if the income tax rate increases to 40%?

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The Answer of Mini Baker products mini cupcakes in various flavors. Suzi Wu opened the shop on January 1 of the current year. The average selling price for each cupcake is $2.50, with some flavors and icings selling for more and some for less. For the first quarter of the current year, the cost of ingredients totaled $28,000; labor to mix, pour, bake, and ice was $35,000; and variable indirect costs, such as supplies, totaled $8,000. The cost of using the baking facility and equipment amounts to $18,000 of fixed product costs each quarter. Selling and administrative costs total $26,000, with 60% variable and 40% fixed. During the first quarter, the company produced and sold 52,000 cupcakes. The income tax rate is 30%.Answer the following questions. Use two decimal places for ratios.
a.Determine the amount of gross margin for the quarter.
b.What is the amount of contribution margin for the quarter? What information does this amount provide to Suzi Wu's bakery? Be specific.
c.Determine the amount of contribution margin ratio for the quarter. What information does it provide to managers? How does it differ from gross margin?
d.Suzi Wu hopes to generate an after-tax target profit of $23,000 per quarter. How much sales revenue must Suzi generate to meet this target?
e.What will happen to the break-even point if the income tax rate increases to 40%?

Mini Baker Products Mini Cupcakes in Various Flavors