Menlo Company distributes a single product. The company's sales and expenses for last month follow:Total$ 608,000425,600Per UnitSalesVariable expenses$ 4028Contribution margin182,400$ 12Fixed expenses150,000$32,400Net operating incomeRequired: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-a. How many units would have to be sold each month to attain a target profit of $75,600?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 sales increase by $62,000 per month and there is no change in fixed expenses, by how muchwould you expect monthly net operating income to increase?Complete this question by entering your answers in the tabs below.Req 1Req 2Req 3AReq 3BReq 4Req 5What is the monthly break-even point in unit sales and in dollar sales?Break-even point in unit salesunitsBreak-even point in dollar sales

Breakeven point means a Level when company earned no profit or no loss.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Question

Menlo Company distributes a single product. The company's sales and expenses for last month follow:
Total
$ 608,000
425,600
Per Unit
Sales
Variable expenses
$ 40
28
Contribution margin
182,400
$ 12
Fixed expenses
150,000
$32,400
Net operating income
Required:
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-a. How many units would have to be sold each month to attain a target profit of $75,600?
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 sales increase by $62,000 per month and there is no change in fixed expenses, by how much
would you expect monthly net operating income to increase?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3A
Req 3B
Req 4
Req 5
What is the monthly break-even point in unit sales and in dollar sales?
Break-even point in unit sales
units
Break-even point in dollar sales

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