Menlo Company distributes a single product. The companys 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		150,000
Net operating income	$	37,200

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 $74,400?

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 companys CM ratio? If sales increase by $70,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

Req 1 Reg 2 Req 3A Req 3B Req 4 Req 5 What is the monthly break-even point in unit sales and in dollar sales? units Break-even point in unit sales Break-even point in dollar sales Req 1 Req 2 Req Req 3B Req 4 Req 5 Without resorting to computations, what is the total contribution margin at the break-even poin Total contribution margin Req 1 Req 2 Req 3A Req 3B Req 4 Req 5 How many units would have to be sold each month to attain a target profit of $74,400? Units sales needed to attain target profit Req 1 Req 2 Req 3A Req 3B Req 4 Reg 5 Verify your answer by preparing a contribution format income statement at the target sale Menlo Company Contribution Income Statement Total Per Unit 0 $ 0 0 Req 1 Reg 2 Req Req 3B Req 4 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 (i.e. 0.1234 should be entered as 12.34).) Dollars Percentage % Margin of safety Req 1 Req 2 Req Req 3B Reg 4 Req 5 What is the company's CM ratio? If sales increase by $70,000 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