Requirement 1. Calculate the weighted-average contribution margin. (Round all currency amounts to the nearest cent.)

		Plain	Filled	Total
Sales price per unit		$4.00	$7.00
-	Variable cost per unit	1.60	2.80
Contribution margin per unit		2.40	4.20
x	Sales mix in units	5	1	6
Contribution margin		$12.00	$4.20	$16.20
Weighted-average contribution margin per unit				$2.70

Requirement 2. Determine

Krazy CreamKrazy Cream 's

monthly breakeven point in dozens of plain donuts and custard-filled donuts. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of costs: variable and fixed.

We'll begin with the breakeven point. Start by selecting the formula and entering the amounts to compute the breakeven point in units for the "package" of

productslong dashtotal

dozens of donuts to be sold. (Complete all answer boxes. Enter a "0" for any zero balances. Enter currency amounts to the nearest cent. Abbreviation used: Weighted-avg. CM = weighted-average contribution margin.)

(	Fixed costs	+	Target profit	) /	Weighted-avg. CM per unit	=	Required sales in units
(	$48,600	+	$0	) /	$2.70	=	18,000

Determine

Krazy CreamKrazy Cream 's

monthly breakeven point in dozens of plain donuts and custard-filled donuts.

The breakeven point is

1500015000

dozen plain donuts and

30003000

dozen custard-filled donuts.

Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of costs: variable and fixed. (Enter a "0" for any zero balances.)

Krazy Cream Donuts
Contribution Margin Income Statement
		Plain	Filled	Total
Sales Revenue		$60,000	$21,000	$81,000
Variable Costs		24,000	8,400	32,400
Contribution Margin		$36,000	$12,600	48,600
Fixed Costs				48,600
Operating Income				$0

Requirement 3. Compute

Krazy CreamKrazy Cream 's

margin of safety in dollars for

AugustAugust

20162016.

Expected sales in dollars	-	Breakeven sales in dollars	=	Margin of safety in dollars
$125,000		$81,000	=	$44,000

Requirement 4. Compute the degree of operating leverage for

Krazy CreamKrazy Cream

Donuts. Estimate the new operating income if total sales increase by

30 %30%.

(Round the degree of operating leverage to four decimal places and the final answer to the nearest dollar. Assume the sales mix remains unchanged.)

Begin by computing the degree of operating leverage for

Krazy CreamKrazy Cream

Donuts. (Round the degree of operating leverage to four decimal places, X.XXXX.)

Contribution margin	/	Operating income	=	Degree of operating leverage
$75,000	/	$26,400	=	2.8409

Estimate the new operating income if total sales increase by

30 %30%.

(Round interim calculations to four decimal places and your final answer to the nearest dollar. Assume the sales mix remains unchanged.)

The estimated operating income will be

$nothing.