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Calculating breakeven point for two products, margin of safety, and operating leverage The contribution margin income statement of Delectable Donuts for May 2018 follows: Delectable
Calculating breakeven point for two products, margin of safety, and operating leverage The contribution margin income statement of Delectable Donuts for May 2018 follows: Delectable sells five dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $4.00, with a variable cost of $1.60 per dozen. A dozen custard-filled donuts sells for $8.00, with a variable cost of '$3.20 per dozen. Requirements 1. Calculate the weighted-average contribution margin. 2. Determine Delectable'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. DELECTABLE DONUTS Contribution Margin Income Statement Month Ended May 31, 2018 Net Sales Revenue 5 125,000 Variable Costs: Cost of Goods Sold $ 32, 100 17,400 Selling Costs Administrative Costs 500 50,000 75,000 Contribution Margin Fixed Costs: 37,800 Selling Costs Administrative Costs 12,600 50,400 Operating Income $ 24,600
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