Salem Bakery Sells Boxes of Donuts Each with a Variable

question 23

Essay

Salem Bakery sells boxes of donuts each with a variable cost percentage of 35%. Its fixed costs are $54600 per year.
Instructions
Determine the sales dollars Salem needs to break even per year.

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Definitions:

Perpetual Inventory System

An inventory control method that records the sale or purchase of inventory in real-time through the use of computerized systems.

Work In Process

A classification of inventory for items that are in the process of being produced but are not yet completed.

Retail Inventory Method

An accounting approach used by retailers to estimate inventory cost by calculating a cost to retail price ratio and applying it to the ending inventory at retail prices.

Gross Profit Method

An inventory costing method to estimate the cost of goods sold and ending inventory, which calculates gross profit by subtracting the cost of goods sold from net sales.