The Proportion Challenged Candy Co. makes and sells boxes of chocolate candy. Proportion has fixed expenses of $250,000 each month plus variable expenses of $5.25 per box of candy. Proportion sells each box of candy for $9.75.

• Compute the contribution margin of each box of candy.

• Compute the number of boxes of candy that Proportion must sell each month to break even. Round up to the nearest whole box.

• Compute the contribution margin ratio for a box of candy

.

• Compute the dollar amount of monthly sales Proportion needs to earn $300,000 in profit. (Round the contribution margin ratio to four decimal places. Round sales up to the nearest dollar.)

• Prepare Proportions contribution margin income statement for December for sales of 260,000 boxes of candy.

• What is the degree of leverage for December sales of 260,000 boxes of candy? (Carry answer out to four decimal places.)

• What is Decembers margin of safety (in dollars and cents)?

• By what percentage will operating income change if Decembers sales volume is 23% higher? (Round to two decimal places.)

• Prove your answer by comparing the difference in operating income after the change with the operating income before the change.