Prompt #2.1 Carla's Soft Drinks Co. (CSD) brews reduced sugar soda and regular soda. Sales of its reduced sugar soda represent 25% of the company's total revenue. Sales of regular soda represent the remaining 75%. Reduced sugar soda has a contribution margin ratio of 80%, whereas the contribution margin ratio of regular soda is only 60%. CSD's monthly fixed costs average $609,500. A. What is the company's monthly break-even point expressed in sales dollars? B. What monthly sales level must be achieved for CSD to earn a monthly operating income of $350,000? C. If CSD generates $1,400,000 in monthly sales, how much monthly operating income will the company earn? D. Assume CSD's margin of safety was $300,000 in May. What was the company's operating income in May?
Prompt #2.1 Carla's Soft Drinks Co. (CSD) brews reduced sugar soda and regular soda. Sales of its reduced sugar soda represent 25% of the company's total revenue. Sales of regular soda represent the remaining 75%. Reduced sugar soda has a contribution margin ratio of 80%, whereas the contribution margin ratio of regular soda is only 60%. CSD's monthly fixed costs average $609,500. A. What is the company's monthly break-even point expressed in sales dollars? B. What monthly sales level must be achieved for CSD to earn a monthly operating income of $350,000? C. If CSD generates $1,400,000 in monthly sales, how much monthly operating income will the company earn? D. Assume CSD's margin of safety was $300,000 in May. What was the company's operating income in May?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Prompt #2.1
Carla's Soft Drinks Co. (CSD) brews reduced sugar soda and regular soda. Sales of its reduced
sugar soda represent 25% of the company's total revenue. Sales of regular soda represent the
remaining 75%. Reduced sugar soda has a contribution margin ratio of 80%, whereas the
contribution margin ratio of regular soda is only 60%. CSD's monthly fixed costs average
$609,500.
A. What is the company's monthly break-even point expressed in sales dollars?
B. What monthly sales level must be achieved for CSD to earn a monthly operating income of
$350,000?
C. If CSD generates $1,400,000 in monthly sales, how much monthly operating income will the
company earn?
D. Assume CSD's margin of safety was $300,000 in May. What was the company's operating income
in May?
E. If CSD's monthly fixed costs increase by $8,500, what level of monthly sales revenue will be
required to break-even?
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