Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Operating income

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Operating income Total $513,000 Per Unit 205,200 $30 12 307,800 $ 18 246,240 $ 61,560 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in sales dollars units 2. Without resorting to computations, what is the total contribution margin at the break-even point? Total contribution margin 3-a. How many units would have to be sold each month to earn a target profit of $102,600? Use the formula method. Units sold units 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 0 $ 0 $ 0 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 $102,600? (Round the final answer to the nearest whole number.) Unit sales required units 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.) Dollars Percentage Margin of safety % 6. What is the company's CM ratio? If sales increase by $57,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? (Round your percentage answer to 2 decimal places and other answer to the nearest whole dollar amount.) CM ratio Monthly operating income increases by

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting for Non-Accounting Students

Authors: John R. Dyson

8th Edition

273722972, 978-0273722977

More Books

Students also viewed these Accounting questions