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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 $ 632,000 442,400 189,600 154,800 $ 34,800 Per Unit $ 40 28 $ 12 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 $52,800? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level.

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 $ 632,000 442,400 189,600 154,800 $ 34,800 Per Unit $ 40 28 $ 12 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 $52,800? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level.

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1 02:57:48 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 Req 1 Total $ 632,000 442,400 Req 2 189,600 154,800 $ 34,800 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 $52,800? 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 dollar and percentage terms. 5. What is the company's CM ratio? If the company can sell more units, thereby increasing sales by $55,000 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. CM ratio Net operating income increases by Per Unit $ 40 28 $ 12 Req 3A Req 3B What is the company's CM ratio? If the company can sell more units thereby increasing sales by $55,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? % Req 4 < Req 4 Req 5 Reg 5 b
Transcribed Image Text:1 02:57:48 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 Req 1 Total $ 632,000 442,400 Req 2 189,600 154,800 $ 34,800 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 $52,800? 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 dollar and percentage terms. 5. What is the company's CM ratio? If the company can sell more units, thereby increasing sales by $55,000 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. CM ratio Net operating income increases by Per Unit $ 40 28 $ 12 Req 3A Req 3B What is the company's CM ratio? If the company can sell more units thereby increasing sales by $55,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? % Req 4 < Req 4 Req 5 Reg 5 b
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