Exercise 6-18 Break-Even and Target Profit Analysis; Margin of Safety; CM Ratlo [LO6-1, LO6-3, LO6-5, LO6-6, LO6-7) Menlo Company distributes a single product. The company's sales and expenses for last month follow: Per Unit $ 20 14 Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ 302,000 211,400 90, 500 76,800 $ 13,800 $ 6 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 $35,400? 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 company's CM ratio? If sales increase by $66,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs Bulow. 20 points Reg 1 Req2 Req 3A Req 3B Req 4 Req 5 eBook What is the monthly break-even point in unit sales and in dollar sales? References Break-even point in unit sales Break-even point in dollar sales Reg 2 > Would you expect monthly Het operating I NC LUWU oints Complete this question by entering your answers in the tabs below. eBook Req 1 Req 2 Req 3A Req 3B Req 4 Req 5 Print Without resorting to computations, what is the total contribution margin at the break-even point? References Total contribution margin How many units would have to be sold each month to attain a target profit of $35,400? Units sales needed to attain target profit Req 1 Req 2 Req 3A Req 3B Reg 4 Req 5 Verify your answer by preparing a contribution format income statement at the target sales level. ences Menlo Company Contribution Income Statement Total Per Unit Reg 1 Req 2 Req 3A Reg 3B Req4 Req 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 (.e. 0.1234 should be entered as 12.34).) Dollars Percentage Margin of safety Reg 1 Reg 2 Req 3A Reg 38 Reg 4 Reg 5 What is the company's CM ratio? If sales increase by $66,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? CM ratio Net operating income increases by
