Question
Menlo Company distributes a single product. The companys sales and expenses for last month follow: Total Per Unit Sales $ 304,000 $ 20 Variable expenses
Menlo Company distributes a single product. The companys sales and expenses for last month follow: Total Per Unit Sales $ 304,000 $ 20 Variable expenses 212,800 14 Contribution margin 91,200 $ 6 Fixed expenses 75,000 Net operating income $ 16,200
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 earn a target profit of $33,000? Use the formula method. |
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. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34)
5. What is the companys CM ratio? If monthly sales increase by $52,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Total $304,000 212,800 Per Unit $ 20 14 $ 6 Contribution margin Fixed expenses 91,200 75,000 Net operating income $ 16,200
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