EXERCISE 5-18 Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio LOS-1, LOS-3, LOS-5, LOS-6, LOS-7 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total Per Unit Sales. $450,000 $30 .... IE Variable expenses. 180,000 12 ... ... 270,000 216,000 $18 Contribution margin Fixed expenses Net operating income. $ 54,000 Re 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3. How many units would have to be sold each month to attain a target profit of S90.000? 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 percent- age terms. 5. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you expecL monthly net operating income to increase?

EXERCISE 5-18 Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio LOS-1, LOS-3, LOS-5, LOS-6, LOS-7 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total Per Unit Sales. $450,000 $30 .... IE Variable expenses. 180,000 12 ... ... 270,000 216,000 $18 Contribution margin Fixed expenses Net operating income. $ 54,000 Re 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3. How many units would have to be sold each month to attain a target profit of S90.000? 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 percent- age terms. 5. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you expecL monthly net operating income to increase?

Name: EXERCISE 5-1S Break-Even and Target Profft Analysis; Margin of Safety
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Description: EXERCISE 5-1S Break-Even and Target Profft Analysis; Margin of Safety; CM Ratio LOS-1, LOS-3,LOS-5, LOS-6, LOS-7Menlo Company distributes a single product. The company's sales and expenses for last monthfollow:TotalPer Unit$450,000180,000$3012SalesV

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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