Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Sales P450,000 Variable expenses 180,000 Contribution margin 270,000 Fixed expenses 216,000 Net operating income P 54,000 Units sold is 15,000 units Required: a. What is the break-even point in units sold and in sales dollars? b. Without resorting to computations, what is the total contribution margin at the break-even point? c. How many units would have to be sold each month to earn a target profit of P90,000? Verify your answer by preparing a contribution format income statement at the target sales level. d. Refer to the original data. Compute the company’s margin of safety in both dollar and percentage terms.
Menlo Company distributes a single product. The company’s sales and expenses for last month follow:
Total
Sales P450,000
Variable expenses 180,000
Contribution margin 270,000
Fixed expenses 216,000
Net operating income P 54,000
Units sold is 15,000 units
Required:
a. What is the break-even point in units sold and in sales dollars?
b. Without resorting to computations, what is the total contribution margin at the break-even point?
c. How many units would have to be sold each month to earn a target profit of P90,000? Verify your answer by preparing a contribution format income statement at the target sales level.
d. Refer to the original data. Compute the company’s margin of safety in both dollar and percentage terms.
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