Wesley Company manufactures and sells a single product. The companys sales and expenses for last quarter follow:

	Total			Per Unit
Sales	$	1,000,000		$	50
Less: Variable expenses		600,000			30
Contribution margin		400,000		$	20
Less: Fixed expenses		260,000
Net operating income	$	140,000

Required:

1.	What is the quarterly 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.

3.	How many units would have to be sold each quarter to earn a target profit of $80,000? Use the formula method.

4.	Refer to the original data. Compute the companys margin of safety for the quarter in both dollar and percentage terms. (Round "Percentage" answer to 1 decimal place, (i.e., 0.123 should be considered as 12.3%).)

5.	What is the companys CM ratio? If quarterly sales increase by $40,000 and there is no change in fixed expenses, by how much would you expect quarterly net operating income to increase? (Do not prepare an income statement; use the CM ratio to compute your answer.)