A) Menlo Company distributes a single product. The companys sales and expenses for last month follow:

	Total			Per Unit
Sales	$	314,000		$	20
Variable expenses		219,800			14
Contribution margin		94,200		$	6
Fixed expenses		75,000
Net operating income	$	19,200

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 $38,400?

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 companys CM ratio? If sales increase by $63,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

B) Magic Realm, Inc., has developed a new fantasy board game. The company sold 43,500 games last year at a selling price of $68 per game. Fixed expenses associated with the game total $783,000 per year, and variable expenses are $48 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor.

Required:

1-a. Prepare a contribution format income statement for the game last year.

1-b. Compute the degree of operating leverage.

2. Management is confident that the company can sell 55,680 games next year (an increase of 12,180 games, or 28%, over last year). Given this assumption:

a. What is the expected percentage increase in net operating income for next year?

b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.)

C) Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $81 per unit. The companys monthly fixed expense is $23,700.

* I JUST NEED PART 2 AND THE ANSWER IS NOT 612 OR 611

Required:

1. Calculate the unit sales needed to attain a target profit of $6,000. (Do not round intermediate calculations.)

2. Calculate the dollar sales needed to attain a target profit of $9,300. (Round your intermediate calculations to the nearest whole number.)

Garrison 16e Rechecks 201