Subject: Business    / Accounting
You have been hired as a consultant for Bravo Baking Company, who began operations in May of 2010 with the production and sales of specialty breads. The company has experienced a good market demand for its high protein, low carbohydrate product called “Hi-Lo.” Hi-Lo’s success has required that Bravo continue to make only this one product, however, Bravo’s customers, the local retailers, have been asking for more specialty breads from the company.

Using the information provided in Table A prepare the Cost of Goods Manufactured Schedule and the Cost of Goods Sold Schedule.

Bravo Baking identified the costs in Table B to determine its cost of one unit of product and its monthly operating costs. Using these costs compute the Breakeven units (round to 2 decimal places), Break-even sales dollars, Contribution Margin, Contribution Margin Ratio (%). If Bravo requires a profit of $5,000 how many units must it sell, and how much total Revenue? If Bravo actually sells 8,000 units, what is the margin of safety in Dollars, and percentage?

Bravo Baking Co has recently expanded its product line to include several other specialty breads the operating result for the last quarter are provided in Table C. Bravo wants to know the effect on Net income if it decides to discontinue the Fruit & Nuts Product. If Bravo eliminates Fruit & Nuts 50% of fixed cost can be avoided. Prepare an incremental analysis showing the net income effect of eliminating the Fruit & Nuts product. Using table C compute the net income for Bravo Baking after eliminating the Fruit & Nuts product.


1. Provide a detailed explanation of results from calculations, include schedules and calculations as exhibits.

2. What recommendation and advice would you make about Fruit & Nuts?

Table A

Bakers Wages


Rent for executive offices


sales Commissions


Utilities used in the factory


advertising costs


Delivery Truck Costs


Depreciation on bake ovens


Interest of bank loan


Beginning Inventory Materials


Beginning Work in Process


Ending Inventory Materials


Inventory Purchases


Ending Work in Process


Other Overhead Costs


Beginning Finished Goods Inventory


Ending Finished Goods Inventory


Rent of Factory


Table B



Material used in baking bread


Saes Commissions


Bakers Wages


Rent for Executive Offices


Factory Supervisor Salaries


Utilities used in the Factory


Advertising costs


Delivery Truck Depreciation


Depreciation of Bake Ovens


Interest on Bank Loan


Total Costs



Price Charged per unit


Table C



Whole Grain

Fruit & Nuts







Variable Product Costs





Variable Selling & Administrative Costs





Contibution Margin





Fixed Product Costs





Fixed Selling & Administrative Costs





Allocated Common Costs





Net Income





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