P7-68B CVP Analysis at a multiproduct firm

The contribution margin income statement of Margot Coffee for February follows: (Click the icon to view the contribution margin income statement.) Margot 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. Requirements 1. Determine Margot Coffee'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 Margot Coffee's margin of safety in dollars. 3. Use Margot Coffee's operating leverage factor to determine its new operating income if sales volume increases 15%. Prove your results using the contribution margin income statement format. Assume the sales mix remains unchanged