80 percent. If the sales mix changes to six widgees to six squigees, will the company have a higher or lower weighted average contribution margin ratio and a higher or lower break-even point (in sales dollars)? Explain the rationale for your answer. 7. Define and explain the relationship between margin of safety and degree of operating leverage. Exercises 8. LO.1 (Variable costing income statement) Tasty Beverages began business in 2010 selling bottles of a thirst-quenching drink. Production for the fi rst year was 104,000 bottles, and sales were 98,000 bottles. Th e selling price per bottle was $3.10. Costs incurred during the year were as follows: Ingredients used $ 56,000 Direct labor 26,000 Variable overhead 48,000 Fixed overhead 5,200 Variable selling expenses 10,000 Fixed selling and administrative expenses 28,000 Total actual cost $173,200 For 2010: a. What was the