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

Total Per Unit

Sales$616,000 $40

Variable expenses431200 28

Contribution margin184,800 $12

Fixed expenses 145,200

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 $82,800?

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 company's CM ratio? If sales increase by $87,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?Net operating income$39,600

Complete this question by entering your answers in the tabs below.

Req 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 dollars sales ?

Req 2

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

Total contribution margin ?

Req 3A

How many units would have to be sold each month to attain a target profit of $82,800?

Unit sales needed to attain target profit ?

Req 3B

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

Menlo Company

Contribution Income Statatement

TotalUnit

??

??

??

??

??

Req 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. 0.1234 should be entered as 12.34).)

DollarsPercentage

Margin of safety?%

Req 5

What is the company's CM ratio? If sales increase by $87,000 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?%