1. Lester Company has a single product. The selling price is $50 and the variable cost is $30 per unit. The company's fixed expenses are $200,000 per month. What is the company's unit contribution margin?

Multiple Choice

• $50

• $30

• $20

• $80

2.

Wesley Company manufactures and sells a single product. The companys income statement at sales level of 15,000 units for last quarter follows:

	Total
Sales	$	600,000
Less: Variable expenses		420,000
Contribution margin		180,000
Less: Fixed expenses		146,520
Net operating income	$	33,480

Required: 1. What is the monthly break-even point in units sold and in sales dollars?

2. Without resorting to computations, calculate the total contribution margin at the break-even point for the quarter.

3-a. How many units would have to be sold each quarter to earn a target profit of $12,000? Use the formula method.

3-b. Verify your answer by preparing a contribution format income statement at the target level of sales.

4. Refer to the original data. Compute the companys margin of safety for the quarter in units, in dollars and as a percentage of last quarters sales. (Round "Percentage" answer to 1 decimal place, (i.e., 0.123 should be considered as 12.3%).)

5. What is the companys CM ratio? If quarterly sales decrease by $80,000 and there is no change in fixed expenses, what would you expect the quarters net operating income to be? (Do not prepare an income statement; use the CM ratio to compute your answer.)