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Exercise 5-18 (Algo) 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 $ 302,000 211,400 Per Unit $ 20 14 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 6 90,600 72,600 $ 18,000 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 $39,600? 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 the company can sell more units thereby increasing sales by $96,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Answer is comnlete but not entirely correct Req 1 Req 2 Req 3A Req 3B Req 4 Reg 5 Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total Per Unit Sales Variable expenses Contribution margin $ 20 X 342,000 14 X 239,400 $ 6 102,600 76,800 X $ (76,794) Fixed expenses Net operating income

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