PROBLEM 4-22 Break-Even Analysis: Target Profit Analysis; Margin of Safety: CM Ratio ILOI. LO3, LO5, L06, L07) Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total Per Unit $30 ....................... $450,000 Variable expenses....... 180.000 Contribution margin..... 270,000 Fixed expenses ........... 216.000 Operating income......... ... $ 54.000 $18 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. How many units would have to be sold each month to earn a target profit of $90,0007 Verify your answer by preparing a contribution format income statement at the target sales level. 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 $90,000? 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. 6. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? 11