EXERCISE 5-11 Break-Even Analysis; Target Profit; Margin of Safety: CM Ratio LO1, LO3, LO5, LO6, LO7) Pringle Company distributes a single product. The company's sales and expenses for a recent month follow Total Per Unit Sales Variable expenses Contribution margin Fixed expenses Net operating income $600,000 $40 28 20,000 180,000 $12 50,000 _ 30,000 216 Chapter 5 Required: . What is the monthly break-even point in units sold and in sales dollars? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3 How many units would have to be sold each month to earn a target profit of $18,000? Use the formula method. Verify your answer by preparing a c the target level of sales Refer to the original data. Compute the company's margin of safety in both dollar and per- centage terms. What is the company's CM ratio? If monthly sales increase by $80,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? income statement at 4. 5