# The contribution margin income statement of Cosmic Coffee for February follows. Cosmic Coffee sells three small coffees

## Question:

Requirements

1. Determine Cosmic Coffee€™s monthly break-even point in numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the break-even level of sales. Show only two categories of expenses: variable and fixed.

2. Compute Cosmic Coffee€™s margin of safety in dollars.

3. Use Cosmic Coffee€™s operating leverage factor to determine its new operating income if sales volume increases by 15%. Prove your results using the contribution margin income statement format. Assume the sales mix remains unchanged.

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**Related Book For**

## Managerial Accounting

**ISBN:** 978-0176223311

1st Canadian Edition

**Authors:** Karen Wilken Braun, Wendy Tietz, Walter Harrison, Rhonda Pyp