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

	Total			Per Unit
Sales	$	314,000		$	20
Variable expenses		219,800			14
Contribution margin		94,200		$	6
Fixed expenses		73,200
Net operating income	$	21,000

Required:
1.	What is the monthly break-even point in unit sales and in dollar sales?

Break-even point in unit sales		units
Break-even point in sales dollars
sheet is drawn here

2.	Without resorting to computations, what is the total contribution margin at the break-even point?

Total contribution margin

sheet is drawn here

3-a.	How many units would have to be sold each month to earn a target profit of $35,400? Use the formula method.

Units sold

sheet is drawn here

3-b.	Verify your answer by preparing a contribution format income statement at the target sales level.

Menlo Company
Contribution Income Statement
	Total	Per unit
Sales		$ 20
Variable expenses		14
Contribution margin	0	$ 6
Fixed expenses
Net operating income	$ 0
sheet is drawn here

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 (i.e .1234 should be entered as 12.34).

	Dollars	Percentage
Margin of safety			%
	sheet is drawn here

5.	What is the companys CM ratio? If monthly sales increase by $66,000 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