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

	Total			Per Unit
Sales	$	616,000		$	40
Variable expenses		431,200			28
Contribution margin		184,800		$	12
Fixed expenses		154,800
Net operating income	$	30,000

Required:
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?

Break-even point in unit sales

Break-even point in unit sales		units
Break-even point in sales dollars

3-a.	How many units would have to be sold each month to earn a target profit of $50,400? Use the formula method. Units Sold:

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
	0	$0
	$0

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).

	Dollars	Percentage
Margin of safety			%

5.

What is the companys CM ratio? If monthly sales increase by $54,000 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