(Solved):       Sarah's Kreations just completed its best year, generating income of \( ...

 

 

 

Sarah's Kreations just completed its best year, generating income of \( \$ 24,000 \) from selling decadent wedding cakes and desserts. For a business that is only two years old and run from Sarah's own kitchen, this is quite an accomplishment. She has been asked to provide a special-event cake for one event per month at the local convention center, but at a reduced price of \( \$ 440 \). While this is mostly fantastic news, Sarah realizes that she is already working at maximum capacity. If she commits to these events, she will need to either find additional capacity or reduce her regular wedding cake sales. The following income statement shows Sarah's results from last year. Sarah's average selling price is \( \$ 1,000 \) per cake; fixed-MOH costs are \( \$ 66,700 \) and are included in COGS. All other product costs vary based on volume. Average variable operating expenses are \( \$ 107 \) per cake; remaining operating expenses are fixed. After thinking about it further, she realizes she'll avoid the variable operating expenses on the special-event cakes. To keep her existing sales volume and take on the new convention center events, Sarah would need to hire additional employees who would "invade" her home while she and her family sleep. Hiring dependable night-shift workers would increase her variable product costs per unit by \( 10 \% \). If she maintains her existing sales and takes on the new events under these circumstances, how much total operating income will she show for next year? Total operating income \$ eTextbook and Media Assistance Used Attempts: 0 of 5 used (b) The parts of this question must be completed in order. This part will be available when you complete the part above. The parts of this question must be completed in order. This part will be avallable when you complete the part above. (c) The parts of this question must be completed in order. This part will be available when you complete the part above.