Question c - subparts 1 to 4

10 12 13 14 15 16 Cost-Volume-Profit Analysis for Bestbrand Bestbrand Sports sells running shoes and sport sandals. The following is selected per-unit information for these two products: Running shoes Sport sandals Sales Price Variable costs and expenses Contribution margin 70% 20% $4 Fixed costs and expenses amount to $350,000 per month. Bestbrand Sports has total sales of $2 million per month, of which 80 percent result from the sale of running shoes and the other 20 percent from the sale of sport sandals. a. Compute separately the contribution margin ratio for each line of products. (2 pts.) b. Assuming the current sales mix, compute: 1. Average contribution margin ratio of total monthly sales. (2 pts.) 2. Monthly operating income. (2 pts.) 3. The monthly break-even sales volume (stated in dollars). (2 pts.) 4. Compute the company's margin of safety if current monthly sales level is $1,300,000. (2pts.) 5. What is the company's operating income if monthly sales is $1,300,000? (2 pts.) Assume that through aggressive marketing Bestbrand is able to shift its sales mix toward more sales of sports sandals. Total sales remain $2 million per month, but now 45 percent of this revenue stems from sales of sports sandals. Using the new sales mix compute: 1. Average contribution margin ratio of total monthly sales. (2 pts.) 2. Monthly operating income. (2 pts.) 3. The monthly break-even sales volume (stated in dollars). (2 pts.) 4. Compute the company's margin of safety if current monthly sales level is $1,300,000. How c. has the margin of safety changed from previous situation? Explain. (3pts.) Explain clearly why the company's financial picture changes so significantly with the new sales mix. (3 pts.) d