Menlo Company distributes a single product. The companys sales and expenses for last month follow:

	Total		Per Unit
Sales	$	450,000		$	30
Variable expenses		180,000			12
Contribution margin		270,000		$	18
Fixed expenses		216,000
Operating income	$	54,000

Required 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 $90,000? (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.

6. What is the companys CM ratio? If sales increase 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?