Question: Step by step solution Exercise 2) Yummy Inc. produces a tasty fudge treat. Each 14-ounce box sells for $11.99. Variable unit costs are as follows:

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Exercise 2) Yummy Inc. produces a tasty fudge treat. Each 14-ounce box sells for $11.99. Variable unit costs are as follows: Sugar Butter Other ingredients Boxes & packing Selling commission0.63 $0.87 2.98 1.36 2.11 Fixed overhead cost is $97,150 per year. Fixed selling and administrative costs are $22,333 per year. Yummy sold 43,210 boxes of fudge last year. Required I. What is the contribution margin ratio for a box of fudge? 2. Prepare a contribution margin operating income statement for Yummy. 3. How many boxes must be sold to break even? 4. What is the margin of safety in dollars? 5. Suppose that Yummy Inc. raises the price to $13.99 per box but anticipates sales to drop by 12,345 boxes. What will the new break-even point in units be? Should Yummy raise the price and how would you explain your answer to the CEO and CFO of Yummy, Inc? 6

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