Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Menlo Company distributes a single product. The company s sales and expenses for last month follow: Total Per Unit Sales $ 4 9 0 ,

Menlo Company distributes a single product. The companys sales and expenses for last month follow:
Total Per Unit
Sales $ 490,500 $ 30
Variable expenses 196,20012
Contribution margin 294,300 $ 18
Fixed expenses 235,440
Operating income $ 58,860
Required:
1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.)
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 earn a target profit of $98,100? Use the formula method.
3-b. Verify your answer by preparing a contribution format income statement at the target sales level.
4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month for an after-tax target profit of $98,100?(Round the final answer to the nearest whole number.)
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.)
6. What is the companys CM ratio? If sales increase by $54,500 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? (Round your percentage answer to 2 decimal places and other answer to the nearest whole dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

13th Edition

978-0073379616, 73379611, 978-0697789938

More Books

Students also viewed these Accounting questions

Question

Estimates of product or service demand on the system. LO.1

Answered: 1 week ago