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Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total $302,000 211,400 Per Unit $20 14 Sales Variable expenses
Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total $302,000 211,400 Per Unit $20 14 Sales Variable expenses Contribution margin Fixed expenses $ 6 90,600 76,200 Net operating income $ 14,400 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? Answer is complete and correct. 12,700 units Break-even point in unit sales Break-even point in sales dollars $ 254,000 2. Without resorting to computations, what is the total contribution margin at the break- even point? Answer is complete and correct. Total contribution margin $ 76,200 3- How many units would have to be sold each month to earn a target profit of a. $33,600? Use the formula method. Answer is complete but not entirely correct. Units sold 18,600 3- Verify your answer by preparing a contribution format income statement at the target b. sales level. Answer is complete but not entirely correct. Per Menlo Company Contribution Income Statement Total unit Sales $ 372,000 X $ 20 Variable expenses 260,400 14 Contribution margin 111,600 Fixed expenses 76,200 Net operating income $ 35,400 4. 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 (ie .1234 should be entered as 12.34). Answer is complete and correct. Margin of safety Dollars $ 48,000 Percentage 15.89 % 5. What is the company's CM ratio? If monthly sales increase by $62,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Answer is complete but not entirely correct. 30 % CM ratio Net operating income increases by $ 15,900
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