The contribution margin income statement of First Choice Coffee for July follows: (Click the icon to view the contribution margin income statement.) First Choice Coffee sells three small coffees for every large coffee. A small coffee sells for $2.00, with a variable expense of $1.00. A large coffee sells for $4.00, with a variable expense of $2.00. Read the requirements. 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.) Fixed expenses Operating income )Weighed-avg. CM per unit = Breakeven sales in units Data table 1 2 3 4 Sales revenue A B C First Choice Coffee Contribution Margin Income Statement Month Ended July 31 $ 60,000 5 Less variable expenses: 6 Cost of goods sold $ 15,500 7 Marketing expense 10,000 8 General and administrative expense 4,500 30,000 9 Contribution margin $ 30,000 10 Less fixed expenses: 11 Marketing expense $ 12,750 12 General and administrative expense 2,250 15,000 $ 15,000 13 Operating income Now calculate the weighted-average contribution margin per unit. (Round the weighted-average contribution margin per unit to the nearest cent.) Sales price per unit Less: Variable expense per unit Contribution margin per unit Sales mix in units Contribution margin Weighted-average contribution margin per unit The breakeven point is Small Large 2 1 Total small cups and large cups of coffee. The breakeven point is small cups and large cups of coffee. Prepare a summary contribution margin income statement to prove your answer above. (Complete all input fields. For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Sales revenue Less Small Large Less Operating income Requirement 2. Compute the coffee shop's margin of safety in dollars. Identify the for Total Requirement 2. Compute the coffee shop's margin of safety in dollars. Identify the formula to compute the margin of safety in dollars. Margin of safety in dollars The margin of safety in dollars is Requirement 3. Use the coffee shop's operating leverage factor (using the July contribution margin income statement) to determine its new operating income if sales volume increases 16%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged Identify the formula to compute the operating leverage factor. (Round your answer to two decimal places.) First Choice Coffee's operating leverage factor is Operating leverage factor If First Choice Coffee can increase sales revenue by 16%, keeping the sales mix the same, operating income will be If First Choice Coffee can increase sales revenue by 16%, 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 50 balance, make sure to enter "0" in the appropriate input field.) First Choice Coffee Effect on Operating Income of 16% Increase in Sales Volume Current level Percent increase Dollar increase Sales revenue Less: Variable expenses Contribution margin Change in fixed expenses Operating income before sales increase Operating income after sales increase 16% 16%