The contribution margin income statement of Delectable Donuts for August 2018 follows: (Click the icon to view the contribution margin income statement.) DelectabiE Donuts Contribution Margin Income Statement Month Ended August 31, 2018 Net Sales Revenue 130,000 Variable Costs: Cost of Goods Sold 32,400 Selling Costs 17,600 2,000 52,000 Administrative Costs Contribution Margin 78,000 Fixed Costs: Selling Costs 37,800 12,600 50,400 Administrative Costs 2$ 27,600 Operating Income Delectable sells five 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 $3.20 per dozen. Read the requirements. 4. Compute the degree of operating leverage for Delectable Donuts. Estimate the new operating income if total sales increase by 10%. (Round the degree of operating leverage to four decimal places and the final answer to the nearest dollar. Assume the sales mix remains unchanged.) 5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 10% increase in total sales. (The sales mix remains unchanged.)
The contribution margin income statement of Delectable Donuts for August 2018 follows: (Click the icon to view the contribution margin income statement.) DelectabiE Donuts Contribution Margin Income Statement Month Ended August 31, 2018 Net Sales Revenue 130,000 Variable Costs: Cost of Goods Sold 32,400 Selling Costs 17,600 2,000 52,000 Administrative Costs Contribution Margin 78,000 Fixed Costs: Selling Costs 37,800 12,600 50,400 Administrative Costs 2$ 27,600 Operating Income Delectable sells five 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. 4. Compute the degree of operating leverage for Delectable Donuts. Estimate the new operating income if total sales increase by 10%. (Round the degree of operating leverage to four decimal places and the final answer to the nearest dollar. Assume the sales mix remains unchanged.) 5. Prove your answer to Requirement 4 by preparing a contribution margin income statement with a 10% increase in total sales. (The sales mix remains unchanged.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The contribution margin income statement of Delectable Donuts for August 2018 follows:
E (Click the icon to view the contribution margin income statement.)
DelectaDie Donuts
Contribution Margin Income Statement
Month Ended August 31, 2018
Net Sales Revenue
$ 130,000
Variable Costs:
Cost of Goods Sold
32,400
Selling Costs
17,600
2,000
52,000
Administrative Costs
Contribution Margin
78,000
Fixed Costs:
Selling Costs
37,800
12,600
50,400
Administrative Costs
27,600
Operating Income
Delectable sells five 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
4. Compute the degree of operating leverage for Delectable Donuts. Estimate
the new operating income if total sales increase by 10%. (Round the degree
of operating leverage to four decimal places and the final answer to the
nearest dollar. Assume the sales mix remains unchanged.)
5. Prove your answer to Requirement 4 by preparing a contribution margin
income statement with a 10% increase in total sales. (The sales mix remains
unchanged.)
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