The contribution margin income statement of First Choice Coffee for May 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 $100. 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.) 0 Data Table Breakeven sales in units - Now calculate the weighted average contribution margin per unit. (Round the weighted average contribution margin per unit to the nearest cent.) Small Large Total B 1 First Choice Coffee Less: 2 Contribution Margin Income Statement Month Ended May 31 3 4 Sales revenue S 70.000 5 Less variable expenses: Weighted average contribution margin per unit 6 $ 16,000 Cost of goods sold Marketing expense 7 15,000 The breakeven point is small cups and I 3 coco o ne large cups of coffee. General and administrative expense 4.000 35,000 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 "O" in the appropriate input field.) 9 Contribution margin $ 35.000 Small Large Total 10 Less fixed expenses 11 Marketing expense 12,000 Less: 12 General and administrative expense 3,000 15,000 13 Operating income S 20.000 Less Choose from any list or enter any number in the input fields and then continue to the next question Print Done The contribution margin income statement of First Choice Coffee for May 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 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 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 Identify the formula to compute the operating leverage factor Data Table Operating leverage factor (Round your answer to two decimal places) First Choice Coffee's operating leverage factor is B 1 First Choice Coffee If First Choice Coffee can increase sales revenue by 14%, keeping the sales mix the same, operating income 2 will be Contribution Margin Income Statement Month Ended May 31 3 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) 4 Sales revenue $ 70,000 First Choice Coffee 5 Less variable expenses: 6 Cost of goods sold 7 Marketing expense $ Effect on Operating Income of 14% Increase in Sales Volume Current level Percent increase Dollar increase 16,000 15,000 Sales revenue 14% 8 General and administrative expense 4.000 35,000 14% $ 35,000 Less: Variable expenses Contribution margin Change in fixed expenses Operating income before sales increase 9 Contribution margin 10 Less fixed expenses 11 Marketing expense 12 General and administrative expense $ 12,000 3,000 15,000 20,000 $ Operating income after sales increase 13 Operating income Choose from any list or enter any number in the input fields and then continue to the next question Print The contribution margin income statement of First Choice Coffee for May 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 $100. 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.) 0 Data Table Breakeven sales in units - Now calculate the weighted average contribution margin per unit. (Round the weighted average contribution margin per unit to the nearest cent.) Small Large Total B 1 First Choice Coffee Less: 2 Contribution Margin Income Statement Month Ended May 31 3 4 Sales revenue S 70.000 5 Less variable expenses: Weighted average contribution margin per unit 6 $ 16,000 Cost of goods sold Marketing expense 7 15,000 The breakeven point is small cups and I 3 coco o ne large cups of coffee. General and administrative expense 4.000 35,000 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 "O" in the appropriate input field.) 9 Contribution margin $ 35.000 Small Large Total 10 Less fixed expenses 11 Marketing expense 12,000 Less: 12 General and administrative expense 3,000 15,000 13 Operating income S 20.000 Less Choose from any list or enter any number in the input fields and then continue to the next question Print Done The contribution margin income statement of First Choice Coffee for May 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 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 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 Identify the formula to compute the operating leverage factor Data Table Operating leverage factor (Round your answer to two decimal places) First Choice Coffee's operating leverage factor is B 1 First Choice Coffee If First Choice Coffee can increase sales revenue by 14%, keeping the sales mix the same, operating income 2 will be Contribution Margin Income Statement Month Ended May 31 3 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) 4 Sales revenue $ 70,000 First Choice Coffee 5 Less variable expenses: 6 Cost of goods sold 7 Marketing expense $ Effect on Operating Income of 14% Increase in Sales Volume Current level Percent increase Dollar increase 16,000 15,000 Sales revenue 14% 8 General and administrative expense 4.000 35,000 14% $ 35,000 Less: Variable expenses Contribution margin Change in fixed expenses Operating income before sales increase 9 Contribution margin 10 Less fixed expenses 11 Marketing expense 12 General and administrative expense $ 12,000 3,000 15,000 20,000 $ Operating income after sales increase 13 Operating income Choose from any list or enter any number in the input fields and then continue to the next question Print