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Q3 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Operating income Break-even point in unit sales Break-even point in sales dollars Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Total contribution margin Total $486,000 194,400 291,600 233,280 $ 58,320 2. Without resorting to computations, what is the total contribution margin at the break-even point? units Per Unit $30 12 $18 3-a. How many units would have to be sold each month to earn a target profit of $97,200? Use the formula method. Units sold Menlo Company Contribution Income Statement Total units 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Per unit

Q3 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Operating income Break-even point in unit sales Break-even point in sales dollars Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Total contribution margin Total $486,000 194,400 291,600 233,280 $ 58,320 2. Without resorting to computations, what is the total contribution margin at the break-even point? units Per Unit $30 12 $18 3-a. How many units would have to be sold each month to earn a target profit of $97,200? Use the formula method. Units sold Menlo Company Contribution Income Statement Total units 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Per unit

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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Q3 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total $486,000 Per Unit $30 12 194,400 Sales Variable expenses Contribution margin Fixed expenses Operating income Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in sales dollars Total contribution margin 2. Without resorting to computations, what is the total contribution margin at the break-even point? Units sold 3-a. How many units would have to be sold each month to earn a target profit of $97,200? Use the formula method. 291,600 $18 233,280 $ 58,320 units Menlo Company Contribution Income Statement. Total 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Unit sales required units units Per unit 4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month for an after-tax target profit of $97,200? (Round the final answer to the nearest whole number.) 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. (Round your percentage answer to 2 decimal places.) Margin of safety Dollars Percentage CM ratio Monthly operating income increases by % 6. What is the company's CM ratio? If sales increase by $54,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? (Round your percentage answer to 2 decimal places and other answer to the nearest whole dollar amount.)
Transcribed Image Text:Q3 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total $486,000 Per Unit $30 12 194,400 Sales Variable expenses Contribution margin Fixed expenses Operating income Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in sales dollars Total contribution margin 2. Without resorting to computations, what is the total contribution margin at the break-even point? Units sold 3-a. How many units would have to be sold each month to earn a target profit of $97,200? Use the formula method. 291,600 $18 233,280 $ 58,320 units Menlo Company Contribution Income Statement. Total 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Unit sales required units units Per unit 4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month for an after-tax target profit of $97,200? (Round the final answer to the nearest whole number.) 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. (Round your percentage answer to 2 decimal places.) Margin of safety Dollars Percentage CM ratio Monthly operating income increases by % 6. What is the company's CM ratio? If sales increase by $54,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? (Round your percentage answer to 2 decimal places and other answer to the nearest whole dollar amount.)
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