Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Total $ 314,000 219,800 Per Unit $ 20 14 $ 6 Contribution margin Fixed expenses 94,200 78,000 Net operating income $ 16, 200 3-a. How many units would have to be sold each month to earn a target profit of $34,800? Use the formula method. Units sold 18,800 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. 20 Menlo Company Contribution Income Statement Total Per unit Sales $ 376,000 $ Variable expenses (263,200) -14 Contribution margin 112,800 $ Fixed expenses (78,000) Net operating income $ 34,800 6 4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month to an after-tax target profit of $34,800? (Round the final answer to the nearest whole number.) Unit sales required units 6. What is the company's CM ratio? If monthly sales increase by $80,000 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