The following monthly budgeted data is available for a wholesale company:

Product L

Product Z

Product C

Sales

$400,000

$200,000

$800,000

Variable expenses

240,000

140,000

640,000

Contribution margin

$160,000

$60,000

$160,000

Budgeted net operating income for the month is $130,000.

Required (10 points):

a. Calculate the break-even sales for the month.

b. Calculate the margin of safety in sales dollars

c. Calculate the operating leverage for the budgeted data.

d. Actual total sales for the month were the same as the budgeted sales - $1,400,000.

However, the sales mix changed so that sales by product were: L - $560,000; Z -

$280,000; C - $560,000. Calculate the expected net operating income with this new

sales mix. Explain why this net operating income figure differs from the original

budgeted net operating income of $130,000.

8.