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Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total $580,000 200,000 380,000 200,000 $180,000 Per Unit $36 16
Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total $580,000 200,000 380,000 200,000 $180,000 Per Unit $36 16 $ 20 Sales Variable expenses Contribution margin Fixed expenses Operating income Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not rond intermediate calculations.) Break-even point in unit sales Break-even point in sales dollars 10,000 units 363.636 $ 2. Without resorting to computations, what is the total contribution margin at the break-even point? Total contribution margin 200,000 3-a. How many units would have to be sold each month to earn a target profit of $88,000? Use the formula method. Units sold 14,400 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 $ 36 Variable expenses 16 Contribution margin 01$ 20 Fixed expenses 200,000 Operating income $ (200,000) 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 $88,000? (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.) Dollar Percentage Margin of safety 6. What is the company's 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 Money Operating income increases by
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