Question
Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total Per Unit Sales $624,000 $40 Variable expenses 436,800 28
Menlo Company distributes a single product. The company's sales and expenses for last month follow:
Total | Per Unit | |
Sales | $624,000 | $40 |
Variable expenses | 436,800 | 28 |
Contribution margin | 187,200 | $12 |
Fixed expenses | 146,400 | |
Net operating income | $40,800 |
a.)What is the monthly break-even point in units sold and in sales dollars?
b.)Without resorting to computations, what is the total contribution margin at the break-even point?
c.)How many units would have to be sold each month to earn a target profit of $75,600?
d.)Verify answer by preparing a contribution format income statement at the target sales level
e.)Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.
f.)What is the company's CM ratio? If sales increase by $98,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started