Ivy Blooms sells wreaths and leis. The following is selected per-unit information for these two products.

	Wreaths		Leis
Sales price	$	40			$	8
Variable costs and expenses		28				2
Contribution margin	$	12			$	6

Fixed costs and expenses amount to $97,500 per month.

The company generates total sales of $300,000 per month, of which 80 percent result from the sale of wreaths and the other 20 percent from the sale of leis.

Required:

a.Compute separately the contribution margin ratio for each line of products.

b.Assuming the current sales mix, compute:

1. Average contribution margin ratio of total monthly sales.

2. Monthly operating income.

3. The monthly break-even sales volume (stated in dollars).

c.Assume that through aggressive marketing the company is able to shift its sales mix toward more sales of leis. Total sales remain $300,000 per month, but now 40 percent of this revenue stems from sales of leis. Using this new sales mix, compute:

1. Average contribution margin ratio of total monthly sales.

2. Monthly operating income.

3. The monthly break-even sales volume (stated in dollars).