Question

Homework: Chapter 20 Homework Assignment Save Score: 0.32 of 1 pt 1 of 1 (1 complete) HW Score: 32.08%, 0.32 of 1 pt P20-41A (similar to) Question Help The contribution margin income statement of Sweet Pea Donuts for August 2018 follows: (Click the icon to view the contribution margin income statement.) Sweet Pea 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 $8.00, with total variable cost of $3.20 per dozen. Read the requirements Requirement 1. Calculate the weighted-average contribution margin (Round all currency amounts to the nearest cent) Total Sales price per unit $ Plain 4.00 $ 1.60 Filled 8.00 3.20 4.80 Variable cost per unit Contribution margin per unit 2.40 x Sales mix in units 4 9.60 4.80 $ 14.40 Contribution margin $ 2.88 Weighted average contribution margin per unit Requirement 2. Determine Sweet Pea'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 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 products-total dozens of donuts to be sold. (Complete all answer boxes. Enter a "0" for any zero balances. Enter currency amounts to the nearest cent. Abbreviation used: Weighted-avg. CM-weighted average contribution margin.) = Required sales in units

Answer 1

Answer 1
	Plain	Filled	total
Selling price per unit	$            4.00	$             8.00
Less: variable cost per unit	$            1.60	$             3.20
Contribution margin per unit	$            2.40	$             4.80
Multiply by : sales mix in units	4	1	5
Contribution margin	$            9.60	$             4.80	$           14.40
Weighted average contribution margin per unit (13.80/5)			$              2.88
Answer 2
Fixed monthly cost			$         34,560
Divided by: Weighted average contribution margin per unit			$              2.88
Monthly break even point in total units			12,000
Monthly break even point in Plain units (12000*4/5)			9,600
Monthly break even point in Filled units (12000*1/5)			2,400
Alternative method for Answer 2
	Plain	Filled	total
Variable cost per unit	$            1.60	$             3.20
Multiply by : sales mix in units	4	1	5
variable cost per unit	$            6.40	$             3.20	$              9.60
Weighted average variable cost per unit (9.20/5)			$              1.92
Multiply by: Monthly break even point in total units			12,000
Total variable cost at break even point sales level			$         23,040
Selling price per unit	$            4.00	$             8.00
Multiply by : sales mix in units	4	1	5
Selling price per unit	$          16.00	$             8.00	$           24.00
weighted average Selling price per unit (23/5)			$              4.80
Fixed cost	Variable cost	Selling price per unit	Required unit in sales
$                                         34,560	$        23,040	$             4.80	12,000
Required unit in sales = (Fixed cost + Variable cost) / Selling price per unit
Monthly break even point in Plain units (12000*4/5)			9,600
Monthly break even point in Filled units (12000*1/5)			2,400
	Plain	Filled	total
Break-even point in units	9,600	2,400	12,000
Break even net sales revenue (selling price per unit * break-even point in units)	$        38,400	$        19,200	$         57,600
Less: variable cost (variable cost per unit * break-even point in units)	$        15,360	$          7,680	$         23,040
contribution margin	$        23,040	$        11,520	$         34,560
Less: fixed cost			$         34,560
operating income			0
operating income at break even level must be zero.
Answer 3
Margin of safety in dollars
Contribution margin			$         76,200
Divided by: Net sales revenue			$       127,000
Contribution margin ratio			60%
Operating income			$         41,640
Divided by: Contribution margin ratio			60%
Margin of safety in dollars			$         69,400
Alternative method for Answer 3
Net sales revenue	Less	Break even net sales revenue	Margin of safety in dollars
$                                       127,000	Less	$        57,600	$         69,400
Answer 4
Contribution margin			$         76,200
Divided by: Operating income			$         41,640
Degree of operating leverage			1.829971
Degree of operating leverage (rounded)			1.8300
% increase in sales			10%
Multiply: Degree of operating leverage (rounded)			1.8300
% increase in operating income			18.30%
Current operating income			$         41,640
Multiply: % increase in operating income			18.30%
Increase in operating income			$           7,620
Add: Current operating income			$         41,640
operating income will be			$         49,260
Answer 5
Net sales revenue (127000+(127000*10%))			$       139,700
Less: variable cost (50800+(50800*10%))			$         55,880
contribution margin			$         83,820
Less: Fixed cost			$         34,560
Operating income if an increase in sales			$         49,260