Exercise 5-18 (Algo) Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio [LO5-1, LO5-3, LO5-5, LO5-6, LO5-7] Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 616,000 $ 40 Variable expenses 431,200 28 Contribution margin 184,800 $ 12 Fixed expenses 154,800 Net operating income $ 30,000 Required: 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. 5. What is the company’s CM ratio? If the company can sell more units thereby increasing sales by $83,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
Exercise 5-18 (Algo) Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio [LO5-1, LO5-3, LO5-5, LO5-6, LO5-7] Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 616,000 $ 40 Variable expenses 431,200 28 Contribution margin 184,800 $ 12 Fixed expenses 154,800 Net operating income $ 30,000 Required: 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. 5. What is the company’s CM ratio? If the company can sell more units thereby increasing sales by $83,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 4PB: West Island distributes a single product. The companys sales and expenses for the month of June are...
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Exercise 5-18 (Algo) Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio [LO5-1, LO5-3, LO5-5, LO5-6, LO5-7]
Menlo Company distributes a single product. The company’s sales and expenses for last month follow:
| Total | Per Unit | |
|---|---|---|
| Sales | $ 616,000 | $ 40 |
| Variable expenses | 431,200 | 28 |
| Contribution margin | 184,800 | $ 12 |
| Fixed expenses | 154,800 | |
| Net operating income | $ 30,000 |
Required:
3-b. Verify your answer by preparing a contribution format income statement at the target sales level.
4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.
5. What is the company’s CM ratio? If the company can sell more units thereby increasing sales by $83,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
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