Required 1. Use the information in Tables "I and IV to prepare a contribution margin or cost-volumeprot income statement. Compute the contribution margin ratios for each semester. Then compute an overall simple average of the semesters. What observations can you make about the contribution margin over time? Using average data computed in 1, compute the breakeven point in sales dollars for the Snack Shop before accepting FoodFunds. Compare the contribution margin ratios computed in 1 and 2 above to the gross prot percentages by product group in Table I. What factors could contribute to differences between these measures? Which give the most accurate measure of breakeven? What actions can the Snack Shop take to increase overall contribution margin ratio? Assuming that the Shop accepts FoodFunds in the spring 2013 semester, prepare a pro-forma contribution margin income statement. Use the average sales and cost data presented for previous semesters and the new costs of FoodFunds to complete this exercise. Show computations for each line. Using the contribution margin from 4, compute the breakeven point in sales dollars for the snack Shop after accepting FoodFunds. How many more sales dollars must be generated to break even after accepting FoodFunds? Is this volume attainable by the Shop? What must the Shop do to achieve and then accommodate the increase in sales? A more precise breakeven point can be calculated if the sales mix is factored in rather than the average contribution margin. Using the sales mix data shown in Table I, compute the breakeven point in sales dollars for the Snack Shop before and after accepting Food Funds. Why are breakeven sales dollars different when considering the weighted average contribution margin for the sales mix than when the average contribution margin (without considering the sales mix} is used? What costs are not captured in the calculation? Hint: see Table l and Operations and Internal Controls above. Table IV Cost of goods sold and gross profit analysis by semester Fail Spring Faff Spring Faff Spring Fall 2009 2010 2010 2011 2011 2012 2012 Net Sales $3,136.48 $3,250.97 $3,292.65 $2,122.63 $2,582.67 $2,094.95 $2,099.73 Costofsafes Beg. inventory 1 06.09 423.07 1 42.36 35.80 425.68 579.64 398.77 Add: purchases 2,191.27 1,479.72 1,648.76 2,136.31 1,524.15 1,104.73 1,264.48 Available for sale 2,297.36 1,902.79 1,791.12 2,222.11 1,949.33 1,684.37 1,663.25 Less: ending inventory 423.07 142.36 85.30 425.68 579.64 398.77 337.85 Costcfgoods sold $1,674.29 $1,760.43 $1,705.32 $1,796.43 $1,370.19 $1,285.60 $1,275.40 Gross prot $1,262.19 $1,490.54 $1587.33 $326.20 $1212.43 $809.35 $824.33 N0. 1 2015