How many units would have to be sold each month to attain a target profit of 35,400

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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How many units would have to be sold each month to attain a target profit of 35,400
Menlo Company distributes a single product. The company's sales and expenses for last month follow:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Total
$ 308,000
215,600
92,400
75,600
$ 16,800
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 $35,400?
3-b. Verify your answer by preparing a contribution format income statement at the target sales level.
Req 1
Per
Unit
$ 20
14
$6
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 $60,000 per month and there is no
change in fixed expenses, by how much would you expect monthly net operating income to increase?
Req 2
Complete this question by entering your answers in the tabs below.
Req 3A
Req 3B
Req 4
Req 5
How many units would have to be sold each month to attain a target profit of $35,400?
Units sales needed to attain target profit
Transcribed Image Text:Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ 308,000 215,600 92,400 75,600 $ 16,800 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 $35,400? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Req 1 Per Unit $ 20 14 $6 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 $60,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Req 2 Complete this question by entering your answers in the tabs below. Req 3A Req 3B Req 4 Req 5 How many units would have to be sold each month to attain a target profit of $35,400? Units sales needed to attain target profit
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