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The contribution margin income statement of Cosmic Donuts for August 2024 follows: Cosmic sells five dozen plain donuts for every two dozen custard-filled donuts. A
The contribution margin income statement of Cosmic Donuts for August 2024 follows: Cosmic sells five dozen plain donuts for every two dozen custard-filled donuts. A dozen plain donuts sells for $4.00, with total variable cost of $1.80 per dozen. A dozen custard-filled donuts sells for $6.80, with total variable cost of $3.06 per dozen. 1. Calculate the weighted-average contribution margin. 2. Determine Cosmic'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. 3. Compute Cosmic's margin of safety in dollars for August 2024. 4. Compute the degree of operating leverage for Cosmic Donuts. Estimate the new operating income if total sales increase by 20%. (Round the degree of operating leverage to four decimal places and the final answer to the nearest dollar. Assume the sales mix remains unchanged.) 5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 20% increase in total sales. (The sales mix remains unchanged.)
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