B.
The Yucki Candy Co. makes and sells boxes of chocolate candy.
Yucki has fixed expenses of $195,000 each month plus variable
expenses of $6.00 per box of candy. Yucki sells each box of candy
for $10.00.
• Compute the contribution margin of each box of candy.
• Compute the number of boxes of candy that Yucki must sell
each month to break even. Round up to the nearest whole box.
• Compute the contribution margin ratio for a box of
candy
.
• Compute the dollar amount of monthly sales Yucki needs to
earn $2500,000 in profit. (Round the contribution margin ratio to
four decimal places. Round sales up to the nearest dollar.)
• Prepare Yucki’s contribution margin income statement for
June for sales of 275,000 boxes of candy.
• What is the degree of leverage for June sales of 275,000
boxes of candy? (Carry answer out to four decimal places.)
• What is June’s margin of safety (in dollars and
cents)?
• By what percentage will operating income change if June’s
sales volume is 25% higher? (Round to two decimal places.)
• Prove your answer by comparing the difference in operating
income after the change with the operating income before the
change.