Krazy Kustard sells two dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $3.00, with total variable cost of $1.35 per dozen. A dozen custard-filled donuts sells for $6.00, with total variable cost of $2.70 per dozen.

Krazy Kustard Donuts
Contribution Margin Income Statement
Month Ended August 31, 2024
Net Sales Revenue			$128,000
Variable Costs:
	Cost of Goods Sold	$32,800
	Selling Costs	17,500
	Administrative Costs	7,300	57,600
Contribution Margin			70,400
Fixed Costs:
	Selling Costs	14,850
	Administrative Costs	4,950	19,800
Operating Income			$50,600

Some parts below are filled in but may be incorrect

The contribution margin income statement of Krazy Kustard Donuts for August 2024 follows: E: (Click the icon to view the contribution margin income statement.) HD Krazy Kustard sells two dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $3.00, with total variable cost of $1.35 per dozen. A dozen custard-filled donuts sells for $6.00, with total variable cost of $2.70 per dozen. Read the requirements. Requirement 1. Calculate the weighted average contribution margin. (Round all currency amounts to the nearest cent.) Plain Filled Total 3.00 6.00 1.35 2.70 Sales price per unit Variable cost per unit Contribution margin per unit Sales mix in units 1.65 3.30 2 1 X 3 3.30 3.30 6.60 Contribution margin Weighted average contribution margin per unit 2.20 Requirement 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. We'll begin with the breakeven point. Start by selecting the formula and entering the amounts to compute the breakeven point in units for the "package" of productstotal dozens of donuts to be sold. (Complete all input fields. Enter a "0" for any zero balances. Enter currency amounts to the nearest cent. Abbreviation used: Weighted-avg. CM = weighted average contribution margin.) Fixed costs Target profit Weighted-avg. CM ratio = Required sales in units ( 19800 0 2.20 = 9000 + + Determine Krazy Kustard's monthly breakeven point in dozens of plain donuts and custard-filled donuts. The breakeven point is 5940 dozen plain donuts and 3060 dozen 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. (Enter a "0" for any zero balances.) Krazy Kustard Donuts Contribution Margin Income Statement Plain Filled Total Net Sales Revenue Variable Costs Contribution Margin Fixed Costs 19800 Operating Income Requirement 3. Compute Krazy Kustard's margin of safety in dollars for August 2024. (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 30% (Round the degree of operating leverage to four decimal places and the final answer to the nearest dollar. Assume the sales mix remains unchanged.) 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 30%. (Round interim calculations to four decimal places and your final answer to the nearest dollar. Assume the sales mix remains unchanged.) The estimated operating income will be Requirement 5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 30% increase in total sales. (The sales mix remains unchanged.) Krazy Kustard Donuts Contribution Margin Income Statement Month Ended August 31, 2024 Net Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income