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

	Total			Per Unit
Sales	$	632,000		$	40
Variable expenses		442,400			28
Contribution margin		189,600		$	12
Fixed expenses		151,200
Net operating income	$	38,400

Required: 1. What is the monthly break-even point in unit sales and in dollar sales? [ Break-even point in unit sales Break-even point in sales dollars 12,600 units 504,000 $ 2. Without resorting to computations, what is the total contribution margin at the break even point? Total contribution margin $ 151,200 3-a. How many units would have to be sold each month to earn a target profit of $64,800? Use the formula method. Units sold 18.000 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total Sales | $ 720,000 Variable expenses 504.000 Contribution margin 218,000 Fixed expenses 151,200 Net operating income $ 64.800 Per unit $ 40 28 S 12 4. Refer to part 3 and now assume that the tax rate is 40%. How many units would need to be sold each month to an after-tax target profit of $64.800? (Round the final answer to the nearest whole number.) Unit salos 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 (.e.1234 should be entered as 12.34).) Margin of safety Dollars $ 128.000 Percentage 20.25% 6. What is the company's CM ratio? If monthly sales increase by $56.000 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