of ma fee Requirements 1. Determine the coffee shop's monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed. 2. Compute the coffee shop's margin of safety in dollars. 3. Use the coffee shop's operating leverage factor (using the October contribution margin income statement) to determine its new operating income if sales volume increases 11%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged. Print Done X ells for $5 f B marg es Data table 3 4 Sales revenue 5 Less variable expenses: 6 Cost of goods sold 7 8 9 Contribution margin 10 Less fixed expenses: 11 12 Month Ended October 31 Marketing expense General and administrative expense Marketing expense General and administrative expense 13 Operating income $ $ 58,500 11,000 2,500 35,700 6,300 $ 144,000 $ $ 72,000 72,000 42,000 30,000 X 5 point(s) pos on: 10 point(s sells for $5.00 The contribution margin income statement of Bountiful Bean Coffee for October follows: (Click the icon to view the contribution margin income statement.) Bountiful Bean Coffee sells three small coffees for every large coffee. A small coffee sells for $3.00, with a variable expense of $1.50. A large coffee sells for $5.00, with a variable expense of $2.50. Read the requirements. Requirement 1. Determine the coffee shop's monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed. Begin by identifying the formula to compute the total breakeven point in units. (Abbreviations used: avg. = Average; CM = Contribution margin.) ) + Weighed-avg. CM per unit = Breakeven sales in units Fixed expenses Operating income Now calculate the weighted-average contribution margin per unit. (Round the weighted-average contribution margin per unit to the nearest cent.) Sales price per unit Less: Variable expense per unit Contribution margin per unit Sales mix in units Contribution margin Weighted-average contribution margin per unit The breakeven point is small cups and Small 3.00 1.50 1.50 3 4.50 Large 5.00 2.50 2.50 1 2.50 Total large cups of coffee. 4 7.00 1.75 Prepare a summary contribution margin income statement to prove your answer above. (Complete all input fields. For amounts with a $0 balance, make sure to enter "U" in the appropriate input field.) Large Total Small Sales revenue Less: Variable expenses Contribution margin Less: Fixed expenses Operating income Requirement 2. Compute the coffee shop's margin of safety in dollars. Identify the formula to compute the margin of safety in dollars. Sales Breakeven sales in dollars = Margin of safety in dollars The margin of safety in dollars is Requirement 3. Use the coffee shop's operating leverage factor (using the October contribution margin income statement) to determine its new operating income if sales volume increases 11%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged. Identify the formula to compute the operating leverage factor. Contribution margin + Operating income (Round your answer to two decimal places.) Bountiful Bean Coffee's operating leverage factor is VE Operating leverage factor If Bountiful Bean Coffee can increase sales revenue by 11%, keeping the sales mix the same, operating income If Bountiful Bean Coffee can increase sales revenue by 11%, keeping the sales mix the same, operating income will be Prepare a summary contribution margin income statement to prove your answer above. (For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Bountiful Bean Coffee Effect on Operating Income of 11% Increase in Sales Volume Sales revenue Less: Variable expenses Contribution margin Change in fixed expenses Operating income before sales increase Operating income after sales increase Current level Percent increase Dollar increase 11% 11%