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

Total

Per Unit

Sales

$

640,000

$

40

Variable expenses

448,000

28

Contribution margin

192,000

$

12

Fixed expenses

152,400

Net operating income

$

39,600

1.) Compute the company's margin of safety in both dollar and percentage terms. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).

2.)	What is the companys CM ratio? If monthly sales increase by $85,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?