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 Per Unit $ 20 14 $6 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. 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?
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 Per Unit $ 20 14 $6 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. 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Verify your answer by preparing a contribution format income statement at the target sales level.
Transcribed Image Text:K
t
nces
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
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.
Per
Unit
$ 20
14
$6
Req 3A
Menlo Company
Req 3B
Req 4
Req 5
Verify your answer by preparing a contribution format income statement at the target sales level.
Transcribed Image Text: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.
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?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3A
Net operating income
Req 3B
$
Verify your answer by preparing a contribution format income statement at the target sales level.
Menlo Company
Contribution Income Statement
Total
Per Unit
0 $
0
< Req 3A
Req 4
0
Req 5
Req 4 >
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