Question
Menlo Company distributes a single product. The companys sales and expenses for last month follow: Total Per Unit Sales $ 450,000 $ 30 Variable expenses
| Menlo Company distributes a single product. The companys sales and expenses for last month follow: |
| Total | Per Unit | ||||
| Sales | $ | 450,000 | $ | 30 | |
| Variable expenses | 180,000 | 12 | |||
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| Contribution margin | 270,000 | $ | 18 | ||
| Fixed expenses | 216,000 |
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| Net operating income | $ | 54,000 | |||
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| 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? |
| 3-a. | How many units would have to be sold each month to earn a target profit of $90,000? 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. |
| 5. | What is the companys CM ratio? If monthly sales increase by $50,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? |
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Buck's The Next Step Advanced Medical Coding And Auditing
Authors: Elsevier
1st Edition
0323762778, 978-0323762779
