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Question 2: Contribution Margin 15 points Mama Balu Corporation manufacture two products Ginger beer drink and Sugar Cane drink. Sales of its Ginger beer drink
Question 2: Contribution Margin 15 points Mama Balu Corporation manufacture two products Ginger beer drink and Sugar Cane drink. Sales of its Ginger beer drink represent 48% of the company's total revenue. Sales of Sugar Cane drink represent the remaining 52%. Ginger beer drink has a contribution margin ratio of 40%, whereas the contribution margin ratio of Sugar Cane drink is only 50%. Mama Balus monthly fixed costs average $550,000. 1 What is the company's monthly break-even point expressed in sales dollars? (round breakeven percentage to a whole percentage example 33.7% will be 34%) 2. What monthly sales level must be achieved for Mama Balu to earn a monthly operating income of $100,000? 3 If Mama Balu generates $1,500,000 in monthly sales, what will be the amount of monthly operating income? 4 Assume Mama Balu s margin of safety was $600,000 in May. What was the company's operating income in May? 5 If Mama Balu's monthly fixed costs increase by $55,000, what level of monthly sales revenue will be required to break-even
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