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

	Total			Per Unit
Sales	$	580,000		$	36
Variable expenses		160,000			16
Contribution margin		420,000		$	20
Fixed expenses		240,000
Operating income	$	180,000

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 ____ units

Break even point in sales dollars $_____

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 $86,000? Use the formula method.

Units sold ____ units

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

Sales total $ / per unit

Variable expenses ____ ______

Contribution margin _____ ______

Fixed expenses _____ ______

Operating income _____ ______

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 $86,000? (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.)

Margin of safety Dollar percentage %

_____ ________

6. What is the companys CM ratio? If sales increase by $48,000 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 ____