The contribution margin income statement of Krazy Cream Donuts for August 2018 follows: E (Click the icon to view the contribution margin income statement.) Krazy Cream sells five dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $4.00, with total variable cost of $1.60 per dozen. dozen custard-filled donuts sells for $7.00, with total variable cost of $2.80 per dozen. Read the requirements We'll begin with the breakeven point. Start by selecting the formula and entering the amounts to compute the breakeven point in units for the "package" of productstotal dozens of donuts to be sold. (Complete all input fields. Enter a "0" for any zero balances. Enter currency amounts to the nearest cent. Abbreviation used: Weighted-avg. CM = weighted average contribution margin.) ( Fixed costs Target profit + Weighted-avg. CM per unit Required sales in units Data Table 48600 0 2.7 15000 Requirements Determine Krazy Cream's monthly breakeven point in dozens of plain donuts and custard-filled donuts. Krazy Cream Donuts The breakeven point is 15000 dozen plain donuts and 3000 dozen custard-filled donuts. Contribution Margin Income Statement Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of costs 1. Calculate the weighted-average contribution margin. 2. Determine Krazy Cream's monthly breakeven point in dozens of plain donuts Month Ended August 31, 2018 Krazy Cream Donuts and custard-filled donuts. Prove your answer by preparing a summary Net Sales Revenue $ 126,000 contribution margin income statement at the breakeven level of sales. Show Contribution Margin Income Statement only two categories of costs: variable and fixed. Variable Costs: Plain Filled Total 3. Compute Krazy Cream's margin safety in dollars for August 2018. Cost of Goods Sold 32,000 Net Sales Revenue 60000 21000 61000 4. Compute the degree of operating leverage for Krazy Cream Donuts. Estimate Selling Costs 17,200 the new operating income if total sales increase by 10%. (Round the degree 24000 8400 Variable Costs 32400 of operating leverage to four decimal places and the final answer to the Administrative Costs 1,200 50,400 nearest dollar. Assume the sales mix remains unchanged.) 36000 Contribution Margin 12600 48600 Contribution Margin 75,600 5. Prove your answer to Requirement 4 by preparing a contribution margin 48600 income statement with a 10% increase in total sales. (The sales mix remains Fixed Costs Fixed Costs: unchanged.) Selling Costs 36,450 Operating Income Administrative Costs 12,150 48,600 Requirement 3. Compute Krazy Cream's margin of safety in dollars for August 2018. (The contribution margin income statement provided should be Print Done $ 27,000 Operating Income Expected sales in dollars Breakeven sales in dollars = Margin of safety in dollars Print Done Requirement 4. Compute the degree of operating leverage for Krazy Cream Donuts. Estimate the new operating income if total sales increase by 10%. (Round the degree of operating leverage to four decimal places and the final answer to the ne Begin by computing the degree of operating leverage for Krazy Cream Donuts. (Round the degree of operating leverage to four decimal places, X.XXXX.) Degree of operating leverage Estimate the new operating income total sales increase by 10% (Round interim calculations to four decimal places and your final answer to the nearest dollar. Assume the sales mix remains unchanged.) The estimated operating income will be Requirement 5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 10% increase in total sales. (The sales mix remains unchanged.)
