Calculating breakeven point for two products, margin of safety, and operating leverage The contribution margin income statement of Delectable Donuts for May 2018 follows: Delectable sells five dozen...

Calculating breakeven point for two products, margin of safety, and operating leverage

The contribution margin income statement of Delectable Donuts for May 2018 follows:

Delectable sells five dozen plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $4.00, with a variable cost of $1.60 per dozen. A dozen custard-filled donuts sells for $8.00, with a variable cost of ‘$3.20 per dozen.

Requirements

1. Calculate the weighted—average contribution margin.


2. 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.

Extracted text: DELECTABLE DONUTS Contribution Margin Income Statement Month Ended May 31, 2018 Net Sales Revenue $ 125,000 Variable Costs: Cost of Goods Sold $ 32,100 Selling Costs 17,400 Administrative Costs 500 50,000 Contribution Margin 75,000 Fixed Costs: Selling Costs 37,800 Administrative Costs 12,600 50,400 Operating Income $ 24,600