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The CVP income statement of Delectable Donuts for August 2014 follows: DELECTABLE DONUTS Contribution Margin Income Statement Month Ended August 31, 2014 Sales Revenue $
The CVP income statement of Delectable Donuts for August 2014 follows: DELECTABLE DONUTS Contribution Margin Income Statement Month Ended August 31, 2014 Sales Revenue $ 150,000 Variable Costs: Cost of Goods Sold $ 41,000 Selling Costs 15,000 Administrative Costs 4,000 60,000 Contribution Margin 90,000 Fixed Costs: Selling Costs 37,800 Administrative Costs 12,600 50,400 Operating Income $ 39,600 Delectable sells four 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. A dozen custard-filled donuts sells for $5.00, with total variable cost of $2.00 per dozen. Requirements: A) Calculate the weighted average unit contribution margin and weighted average contribution margin ratio. B) Determine Delectable'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. C) Compute Delectable's margin of safety in dollars for August 2014. D) If Delectable desires to have a profit of $30,000 for August 2014, how many dozens of plain donuts and custard-filled donuts it must sell to achieve this target net income. (Round the answer to the nearest dozens)
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