The contribution margin income statement of Krazy Kup Coffee for July follows:

$($Click the icon to view the contribution margin income statement.$)$

Krazy Kup Coffee sells three small coffees for every large coffee. A small coffee sells for $$2\mathrm{.}00,$ with a variable expense of $$1\mathrm{.}00.$ A large coffee sells for $$4\mathrm{.}00,$ with a variable expense of $$2\mathrm{.}00.$

Read the requirements. 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 $+$ Weighed$-$avg. $CM$ per unit grad$=$ 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.$)$

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 cups and large cups of coffee.

Requirement $2.$ Compute the coffee shop's margin of safety in dollars.

Identify the formula to compute the margin of safety in doilars.

The margin of safoty in dollars is sales mix remains unchanged.

Identify the formula to compute the operating leverage factor.