Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The contribution margin income statement of Creamy Donuts for August 2024 follows: (Click the icon to view the contribution margin income statement.) Creamy sells eight
The contribution margin income statement of Creamy Donuts for August 2024 follows: (Click the icon to view the contribution margin income statement.) Creamy sells eight dozen plain donuts for every three dozen custard-filled donuts. A dozen plain donuts sells for $3.70, with total variable cost of $1.48 per dozen. A dozen custard-filled donuts sells for $7.00, with total variable cost of $2.80 per dozen. Requirement 1. Calculate the weighted-average contribution margin. (Round all currency amounts to the nearest cent.) fixed. amounts to the nearest cent. Abbreviation used: Weighted-avg. CM= weighted-average contribution margin.) = Required sales in units = Requirements 1. Calculate the weighted-average contribution margin. 2. Determine Creamy'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 Creamy's margin of safety in dollars for August 2024. 4. Compute the degree of operating leverage for Creamy 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.) Data table
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started