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Requirements 1. Determine the coffee shop's monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary
Requirements 1. Determine the coffee shop's monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed. 2. Compute the coffee shop's margin of safety in dollars. 3. Use the coffee shop's operating leverage factor (using the May contribution margin income statement) to determine its new operating income if sales volume increases 14%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged. Requirement 1. Determine the coffee shop's monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed. Begin by identifying the formula to compute the total breakeven point in units. (Abbreviations used: avg. = Average; CM= Contribution margin.) Requirement 2. Compute the coffee shop's margin of safety in dollars. Identify the formula to compute the margin of safety in dollars. =Marginofsafetyindollars The margin of safety in dollars is results using the contribution margin income statement format. Assume that sales mix remains unchanged. Identify the formula to compute the operating leverage factor. =Operatingleveragefactor (Round your answer to two decimal places.) Awesome Coffee's operating leverage factor is If Awesome Coffee can increase sales revenue by 14%, keeping the sales mix the same, operating income will be (Round your answer to two decimal places.) Awesome Coffee's operating leverage factor is If Awesome Coffee can increase sales revenue by 14%, keeping the sales mix the same, operating income will be Prepare a summary contribution margin income statement to prove your answer above. (For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Data table
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