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Answer :
To determine Cove's break-even point, divide total fixed costs by the contribution margin per unit or ratio. The margin of safety is the difference between current sales and the break-even point.
To determine Cove's break-even point in units, divide the total fixed costs by the contribution margin per unit. The contribution margin is the selling price per unit minus the variable cost per unit. For the break-even point in sales dollars, divide the total fixed costs by the contribution margin ratio (contribution margin divided by the selling price).
To calculate the margin of safety, subtract the break-even point (in sales dollars) from the current sales. The margin of safety represents the amount by which actual sales can decrease before reaching the break-even point. It indicates the bakery's cushion or buffer in case of lower-than-expected sales.However, the specific values for selling price, variable costs, fixed costs, and current sales are missing from the question. Without these figures, it is not possible to provide an accurate calculation. Please provide the necessary data for a more precise answer.
Therefore, To determine Cove's break-even point, divide total fixed costs by the contribution margin per unit or ratio. The margin of safety is the difference between current sales and the break-even point.
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