The contribution margin income statement of Hemingway Coffee for February follows:

Hemingway Coffee sells three small coffees for every large coffee. A small coffee sells for $2.00, with a variable expense of $1.00. A large coffee sells for $4.00, with a variable expense of $2.00.
Requirements
1. Determine Hemingway Coffee's monthly breakeven point in numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed.
2. Compute Hemingway Coffee's margin of safety in dollars.
3. Use Hemingway 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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Hemingway Coffee Contribution Margin Income Statement For the Month Ended February 29 Sales revenue $94,000 Variable expenses: Cost of goods sold Marketing expense General and administrative expense $30,000 8,000 2.000 40,000 Contribution margin Fixed expenses: $54,000 $24,750 Marketing expense General and administrative expense 5,250 30,000 $24,000 Operating i