Question

The contribution margin income statement of

Cosmic

Donuts for

August

2016

?follows:

Cosmic

sells

three

dozen plain donuts for every dozen? custard-filled donuts. A dozen plain donuts sells for

$ 4.00,

with total variable cost of

$ 1.80

per dozen.

A dozen? custard-filled donuts sells for

$ 8.00

with total variable cost of

$ 3.60

per dozen.

Read the requirements:

.

Requirement 1. Calculate the? weighted-average contribution margin.? (Round all currency amounts to the nearest? cent.)

		Plain	Filled	Total
-
x
Contribution margin
Weighted-average contribution margin per unit Cosmic Donuts Contribution Margin Income Statement Month Ended August 31, 2016 Sales Revenue $126,000 Variable Costs: Cost of Goods Sold $32,400 Selling Costs 17,300 Administrative Costs 7,000 56,700 Contribution Margin 69,300 Fixed Costs: Selling Costs 24,750 Administrative Costs 8,250 33,000 Operating Income $36,300			Calculate the? weighted-average contribution margin. 2. Determine CosmicCosmic?'s monthly breakeven point in dozens of plain donuts and? custard-filled donuts. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of? costs: variable and fixed. 3. Compute CosmicCosmic?'s margin of safety in dollars for AugustAugust 20162016. 4. Compute the degree of operating leverage for CosmicCosmic Donuts. Estimate the new operating income if total sales increase by 10 %10%. ?(Round the degree of operating leverage to four decimal places and the final answer to the nearest dollar. Assume the sales mix remains? unchanged.) 5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 10 %10% increase in total sales.? (The sales mix remains? unchanged.)

Answer 1