Exercise 5-18 Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio (LO5-1, LO5-3, LO5-5, LO5-6, LO5-7) Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 450,000 180,000 270,000 216,000 $ 54,000 Per Unit $ 30 12 $ 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-a. How many units would have to be sold each month to attain a target profit of $90,000? 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 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B Req 4 Req 5 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 Req 1 Req 2 Req Req 3B Req 4 Req 5 Without resorting to computations, what is the total contribution margin at the break-even point? Total contribution margin Reg1 Req 1 Req 2 Rega | Req3A | Req3B Req Req 3B Rega Req5 Req 4 Req 5 How many units would have to be sold each month to attain a target profit of $90,000? Units sales needed to attain target profit Req 1 Req 2 Req Req 3B Req 4 Req 5 Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total Per unit Rega Rega Rea Sa Reg 38 Req 1 Rega Reqs Req 2 Req Req 3B Req 4 Req 5 Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. Dollars Percentage Margin of safety Dollars Margin of safety Percentagem Req 1 Req 2 Req Req 3B Req 4 Req 5 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? CM ratio Net operating income increases by