Exercise 6-18 (Static) Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio (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 $ 30 12 Total $ 450,000 180,000 270,000 216,000 $ 54,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 18 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 $90,000? 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 the company can sell more units thereby increasing sales by $50,000 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. Reg 1 Req 2 Reg 3A Reg 3B Reg 4 Reg 5 Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total Per unit Exercise 6-18 (Static) Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio (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 $ 30 12 Total $ 450,000 180,000 270,000 216,000 $ 54,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 18 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 $90,000? 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 the company can sell more units thereby increasing sales by $50,000 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. Reg 1 Reg 2 Reg 3A Req 3B Reg 4 Req 5 Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. Dollars Percentage Margin of safety Exercise 6-18 (Static) Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio (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: Sales Variable expenses Contribution margin Total $ 450,000 180,000 Per Unit $ 30 12 $ 18 270,000 216,000 Fixed expenses Net operating income $ 54,000 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 $90,000? 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 the company can sell more units thereby increasing sales by $50,000 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. Reg 1 Reg 2 Reg 3A Req 3B Req 4 Reg 5 What is the company's CM ratio? If the company can sell more units thereby increasing sales by $50,000 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
