Question

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.) Plain Filled Total Contribution margin 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 Determine Sweet Pea's monthly breakeven point in dozens of plain donuts and custard-filled donuts. The breakeven point is L dozen plain donuts and dozen custard-filled donuts. DrauA VALT anwar hunrenarinen cummons contribution marrin income ottamant nt tha hranlawan loul of color Chouank tun estanarine of carte variable and fivad (Cntar "O" far onu zara holancar

Answer 1

Calculation of weighted average contribution margin
	Plain	Filled	Total
Selling price	4	8
Less: Variable cost	1.6	3.2
Contribution margin per unit	2.4	4.8
Sales mix	4	1	5
Contribution margin	9.6	4.8	14.4
Weighted average contribution margin			2.88
Break even point = Fixed costs/Weighted average contribution margin
15000	Units
Plain	12000	units
Filled	3000	units
Contribution Margin Income Statement
	Plain	Filled	Total
Sales Revenue	48,000	24,000	72,000
Less: Variable cost	19,200	9,600	28,800
Contribution margin per unit	28,800	14,400	43,200
Less: Fixed costs			43,200
Operating income			0
Margin of safety in dollars = Sales - Break even sales
56,000
Degree of operating leverage = Contribution margin/Operating income
=76800/33600
2.285714286
Increase In operating income = Increase in sales*Degree of operating leverage
68.57142857	%
New operating income	56640
Contribution Margin Income Statement
Sales	166400
Less: Variable cost	66560
Contribution margin per unit	99840
Less: Fixed costs	43200
Operating income	56640