Krazy Kustard sells five 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. dozen custard-filled donuts sells for $7.00, with total variable cost of $2.80 per dozen. Requirements -X 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 margin income statement at the breakeven level of sales. Show only two categories of costs: variable and fixed 3. Compute Krazy Kustard's margin of safety in dollars for August 2018 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 operating leverage to four decimal places and the final answer to the nearest dollar. Assume the sales mix remains unchanged.) 5. Prove your answer Requirement 4 by preparing a contribution margin income statement with a 40% increase in total sales. (The sales mix remains unchanged.) ama ries of costs: variable and fixed. cts- hces. Enter currency amounts to the nearest cent. Abbreviation i Data Table . - Krazy Kustard Donuts Contribution Margin Income Statement Month Ended August 31, 2018 Net Sales Revenue $ 129,000 Variable Costs: Cost of Goods Sold $ 32,600 Selling Costs 17,300 Administrative Costs 1,700 51,600 Contribution Margin 77,400 Fixed Costs: Selling Costs 36,450 Administrative Costs 12,150 48,600 $ 28,800 Operating Income Print Done Requirement 1. Calculate the weighted average contribution margin. (Round all currency amounts to the nearest cent.) Plain Filled Total 7 Sales price per unit Variable cost per unit Contribution margin per unit 1.6 2.8 2.4 4.2 Contribution margin Weighted average contribution margin per unit Requirement 2. Determine Krazy Kustard's monthly breakeven point in dozens of plain donuts and custard-filled donuts. Prove your ans We'll begin with the breakeven point. Start by selecting the formula and entering the amounts to compute the breakeven point in units for used: Weighted-avg. CM = weighted average contribution margin.) Fixed costs Target profit )/ Weighted-avg. CM per unit = Required sales in units ) / Determine Krazy Kustard's monthly breakeven point in dozens of plain donuts and custard-filled donuts. The breakeven point is dozen plain donuts and dozen custard-filled donuts. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two catego Krazy Kustard Donuts Contribution Margin Income Statement Plain Filled Total Net Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income Requirement 3. Compute Krazy Kustard's margin of safety in dollars for August 2018. (The contribution margin income statement provided should be used to determine any expected results Margin of safety in dollars Requirement 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 operating leve Begin by computing the degree of operating leverage for Krazy Kustard Donuts. (Round the degree of operating leverage to four decimal places, X.XXXX.) = Degree of operating leverage Estimate the new operating income if total sales increase by 40%. (Round interim calculations to four decimal places and your final answer to the nearest dollar. Assume the sales mix remain The estimated operating income will be $ Requirement 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.) Krazy Kustard Donuts Contribution Margin Income Statement Month Ended August 31, 2018 Net Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income
