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

	Total	Per Unit
Sales	$ 320,000	$ 20
Variable expenses	224,000	14
Contribution margin	96,000	$ 6
Fixed expenses	75,000
Net operating income	$ 21,000

Required:

1. What is the monthly break-even point in unit sales and in dollar sales?

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

2. Without resorting to computations, what is the total contribution margin at the break-even point?

Total contribution margin

3-a. How many units would have to be sold each month to attain a target profit of $29,400?

Units sales needed to attain target profit

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.

	Dollars	Percentage
Margin of safety			%

5. What is the companys CM ratio? If the company can sell more units thereby increasing sales by $62,000 per month 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