230 CHAPTER 4 Check sum: Weighted average contribution margin/unit is $1.25. P4-67A Conduct a CVP analysis of a multiproduct firm (Learning Objectives 4 & 5) The contribution margin income statement of Extreme Coffee for February is as follows. three small coffees for every large coffee. A small coffee sells for $2 with a variable expense of $1. A large coffee sells for $4 with a variable expense of $2. EXTREME COFFEE Contribution Margin Income Statement For the Month Ended February 29 $90,000 $32,000 10,000 3,000 ........ .... Sales revenue ................ Variable expenses: Cost of goods sold.............. Marketing expense.......... General and administrative expense .......................... Contribution margin ..... ... Fixed expenses: Marketing expense ............ General and administrative expense ...................... Operating income................ 45,000 45,000 16,500 3,500 20,000 $25,000 Requirements 1. Determine Extreme Coffee's monthly break-even point in the numbers of small col- fees and large coffees. Prove your answer by preparing a summary contribution mar- gin income statement at the break-even level of sales. Show only two categories of expenses: variable and fixed. 2. Compute Extreme Coffee's margin of safety in dollars. 3. Use Extreme Coffee's operating leverage factor to determine its new operating income ales volume increases 15%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged