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45 20 PSS3A Call Calculating breakeven point for two products margin of safety, and operating leverage The contribution margin income statement of K u w

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45 20 PSS3A Call Calculating breakeven point for two products margin of safety, and operating leverage The contribution margin income statement of K u w s for August 2016 Learning follows: 2. 12,000 de Donuts for August 2016 on test KRAZY KUSTARD DONUTS Contribution Margin Income Statement Month Ended August 31, 2016 Sales Revenue 5 125.000 Variable Costs Cost of Good Sold $32,100 Selling Costs Administrative Costs Contribution Margin Fixed Costs: Selling Costs 32,400 Administrative Costs 10.800 Operating Income 17,100 800 50,000 75,000 43,200 $ 31,800 Vanable Krazy Kustard sells four dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $4.00, with total variable cost of $1.60 per dozen. A dozen custard-filled donuts sells for $8.00, with total variable cost of $3.20 per dozen. Cont Requirements 1. Calculate the weighted average contribution margin. 2. Determine Krazy Kustard's monthly breakeven point in dozens of plain donuts and custard-filled donuts. Prove your answer by preparing a summary contribution 4 margin income statement at the breakeven level of sales. Show only two categories 9.60 of costs: variable and fixed. 3. Compute Krazy Kustard's margin of safety in dollars for August 2016. magin 4. Compute the degree of operating leverage for Krazy Kustard Donuts. Estimate the new operating income if total sales increase by 40%. (Round the degree of Conden operating leverage to four decimal places and the final answer to the nearest dollar. De Assume the sales mix remains unchanged.) 5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 40% increase in total sales. (The sales mix remains unchanged.) (125,000 X1.10) 2 (450100 x 140) = - - Sales Rev. le

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