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Pringle Company distributes a single product. The companys sales and expenses for a recent month follow: Total Per Unit Sales $ 314,000 $ 20 Variable
Pringle Company distributes a single product. The companys sales and expenses for a recent month follow: |
Total | Per Unit | ||||
Sales | $ | 314,000 | $ | 20 | |
Variable expenses | 219,800 | 14 | |||
Contribution margin | 94,200 | $ | 6 | ||
Fixed expenses | 76,800 | ||||
Net operating income | $ | 17,400 | |||
Required: | |
1. | What is the monthly break-even point in units sold and in sales dollars? |
Break-even point in unit sales | units |
Break-even point in sales dollars | $ |
2. | Without resorting to computations, what is the total contribution margin at the break-even point? |
Total contribution margin | $ |
3. | How many units would have to be sold each month to earn a target profit of $25,800? Use the formula method. |
Units sold |
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.) |
Dollars | Percentage | |
Margin of safety | $ | % |
5. | What is the companys CM ratio? If monthly sales increase by $82,000 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 | $ |
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