Large Round Aussie Donut Limited presently produces super-super-size donuts across Australia and New Zealand through a variety of specialist stores. The management of Large Round Aussie Donut Limited is currently planning for the next financial year (that is, January 1, 2019 to December 31, 2019) and have requested projections for key input estimates.

During the current financial year (that is, January 1, 2018 to December 31, 2018), Large Round Aussie Donut Limited is on pace to produce and sell 26,390,000 super-super-size donuts. Nearly 57% of this production output is sold and consumed by Dr. Mitchells mother. The average selling price of super-super- size donuts produced and sold during the current financial year for Large Round Aussie Donut Limited is $22.88.

For the current financial year, the following per-unit variable costs have been determined for each super- super-size donut:

Direct Material

Direct Labor

Variable Manufacturing Overhead Variable Selling Expense

In addition, for the 2018 financial year fixed manufacturing overhead will total $41,211,650, fixed administrative overhead $62,159,050 and fixed marketing overhead $35,091,222.The management of Large Round Aussie Donut Limited estimate that super-super-size donut production and sales in the 2019 financial year will grow 10% from 2018. Meanwhile, all variable costs are estimated to increase by 8% and all fixed costs by 15%.

Required:

(1) Preparethe2019financialyear(i.e.,January1,2019toDecember31,2019)CVPincomestatement in dollars (not per unit) based on projections/estimates for 2019.

(2) Calculate the 2019 contribution margin per unit.

(3) Calculate the 2019 contribution margin ratio.

(4) Determine the number of units required to be sold in 2019 to break even.

(5) What is the safety margin (in dollars) based on 2019 financial year projections?

(6) If the company wanted to earn a net income of $298,884,050 in 2019, how many super-super-size

(7) Assume Large Round Aussie Donut Limited plans to add a new product of Extra-Large Pies that will be sold for $56 with costing as (i) direct material of $12.20; (ii) direct labor of $6.75, (iii) variable manufacturing overhead of $4.70 and (iv) variable selling expenses of $7.85. What is the sales mix contribution margin per unit and in dollars if Large Round Aussie Donut Limited projects a sales mix of 65:35 (old product:new product)?