Wesley Company manufactures and sells a single product. The companys income statement at sales level of 25,000 units for last quarter follows:

	Total
Sales	$	750,000
Less: Variable expenses		525,000
Contribution margin		225,000
Less: Fixed expenses		180,000
Net operating income	$	45,000

Required:

1. What is the monthly break-even point in units sold and in sales dollars?

2. Without resorting to computations, calculate the total contribution margin at the break-even point for the quarter.

3-a. How many units would have to be sold each quarter to earn a target profit of $36,900? Use the formula method.

3-b. Verify your answer by preparing a contribution format income statement at the target level of sales.

4. Refer to the original data. Compute the companys margin of safety for the quarter in units, in dollars and as a percentage of last quarters sales.

5. What is the companys CM ratio? If quarterly sales decrease by $22,500 and there is no change in fixed expenses, what would you expect the quarters net operating income to be? (Do not prepare an income statement; use the CM ratio to compute your answer.)