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

	Total			Per Unit
Sales	$	520,000		$	28
Variable expenses		220,000			18
Contribution margin		300,000		$	10
Fixed expenses		160,000
Operating income	$	140,000

Required:

1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.)

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 12,300 units 492,000 $ 2. Without resorting to computations, what is the total contribution margin at the break-even point? Total contribution margin $ 196,800 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 692,000 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 Sales 0 $ 0 Variable expenses Contribution margin Fixed expenses Operating income S 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 $86,000? (Round the final answer to the nearest whole number.) Unit sales required 140,000 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 22.15 % Margin of safety S 140,000 6. What is the company's CM ratio? If sales increase by $46,000 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