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Menlo Company distributes a single product. The company's sales and expenses for last month follow: Per Unit $ 40 28 $ 12 Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ 608,000 425,600 182,400 148,800 $ 33,600 Required: - What is the monthly break-even point in unit sales and in dollar sales? . Without resorting to computations, what is the total contribution margin at the break-even point? -a. How many units would have to be sold each month to attain a target profit of $74,400? -b. Verify your answer by preparing a contribution format income statement at the target sales level. Refer to the original data Comput

Menlo Company distributes a single product. The company's sales and expenses for last month follow: Per Unit $ 40 28 $ 12 Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ 608,000 425,600 182,400 148,800 $ 33,600 Required: - What is the monthly break-even point in unit sales and in dollar sales? . Without resorting to computations, what is the total contribution margin at the break-even point? -a. How many units would have to be sold each month to attain a target profit of $74,400? -b. Verify your answer by preparing a contribution format income statement at the target sales level. Refer to the original data Comput

FINANCIAL ACCOUNTING
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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Menlo Company distributes a single product. The company's sales and expenses for last month follow: Per Unit $ 40 28 $ 12 Sales Variable expenses Contribution margin Fixed expenses 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 $74,400? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Total $ 608,000 425,600 182,400 148,800 $ 33,600 4. Refer to the original data. Compute the company's margin of safety in dollar and percentage terms. 5. What is the company's CM ratio? If the company can sell more units, thereby increasing sales by $78,000 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 What is the monthly break-even point in unit sales and in dollar sales? Break-even point in unit sales Break-even point in dollar sales units Req 4 < Req 1 Req 5 Req 2 >
Transcribed Image Text:Menlo Company distributes a single product. The company's sales and expenses for last month follow: Per Unit $ 40 28 $ 12 Sales Variable expenses Contribution margin Fixed expenses 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 $74,400? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Total $ 608,000 425,600 182,400 148,800 $ 33,600 4. Refer to the original data. Compute the company's margin of safety in dollar and percentage terms. 5. What is the company's CM ratio? If the company can sell more units, thereby increasing sales by $78,000 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 What is the monthly break-even point in unit sales and in dollar sales? Break-even point in unit sales Break-even point in dollar sales units Req 4 < Req 1 Req 5 Req 2 >
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