Question
Please answer all questions. Please show work. Fatso Candy makes and sells boxes of chocolate candy. Fatso has fixed expenses of $220,000 each month plus
Please answer all questions. Please show work.
Fatso Candy makes and sells boxes of chocolate candy. Fatso has fixed expenses of $220,000 each month plus variable expenses of $5.20 per box of candy. Fatso sells each box of candy for $9.65.
1. Compute the number of boxes of candy that Fatso must sell each month to break even. Round up to the nearest whole box.
2. Compute the dollar amount of monthly sales Fatso needs to earn $250,000 in profit. (Round the contribution margin ratio to four decimal places. Round sales up to the nearest dollar.)
3.Prepare Fatsos contribution margin income statement for November for sales of 245,000 boxes of candy. What is the degree of leverage at this level of sales? (Carry answer out to four decimal places.)
4. What is Novembers margin of safety (in dollars and cents)?
5. By what percentage will operating income change if Decembers sales volume is 24% higher? (Round to two decimal places.) Prove your answer by comparing the difference in operating income after the change with the operating income before the change.
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