# Calculating breakeven point for two product lines

Please open attached file CH5 for the problem, and also use attached file P5-27A for your solution.

Calculating breakeven point for two product lines; margin of safety

The contribution margin income statement of Cosmic Donuts for March 2012follows:

COSMIC DONUTS

Contribution Margin Income Statement

For the month of March 2012

Sales revenue $127,000

Variable costs:

Cost of goods sold $32,400

Marketing costs 17,300

General and administrative cost 10,625 60,325

Contribution margin 66,675

Fixed costs:

Marketing costs 56,700

General and administrative cost 6,300 63,000

Operating income $3,675

Cosmic sells two dozens plain donuts for every dozen custard-filled donuts. A dozen plain donuts sells for $6, with total variable cost of $2 per dozen custard-filled donuts sells for $8, with total variable cost of $5.50 per dozen.

Requirements

1. Determine Cosmic's monthly breakeven point in dozens of plain donuts and custard-filled donuts. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of costs: variable and fixed.

2. Compute Cosmic's margin of safety in dollars for March 2012

3. If Cosmic can increase monthly sales volume by 10% what will operating income be? (The sales mix remains uncharged.)

https://brainmass.com/business/the-marketing-mix/calculating-breakeven-point-two-product-lines-376927

#### Solution Summary

This solution provides a complete computation of the given accounting problem formatted in Excel.