The contribution margin income statement of Creamy Donuts for August 2018 follows:

Creamy Donuts
Contribution Margin Income Statement
Month Ended August 31, 2018
Net Sales Revenue			$129,000
Variable Costs:
	Cost of Goods Sold	$32,400
	Selling Costs	17,300
	Administrative Costs	1,900	51,600
Contribution Margin			77,400
Fixed Costs:
	Selling Costs	37,800
	Administrative Costs	12,600	50,400
Operating Income			$27,000

Creamy sells five dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $4.00, with total variable costs of $1.60 per dozen. A dozen custard-filled donuts sell for $8.00, with total variable costs of $3.20 per dozen.

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 2018.

4. Compute the degree of operating leverage for Creamy Donuts. Estimate the new operating income if total sales increase by 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.)

5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 30% increase in total sales. (The sales mix remains unchanged.)