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Menlo Company distributes a single product. The company's sales and expenses for last month follow:...

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Accounting

Menlo Company distributes a single product. The company's sales and expenses for last month follow:

Total Per Unit

Sales $302,000 $20

Variable expenses 211,400 14

Contribution margin 90,600 $6

Fixed expenses 78,000

Net operating income$ 12,600

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 earn a target profit of $33,600? Use the formula method.

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

4.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 $33,600?(Round the final answer to the nearest whole number.

5.Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.(Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).)

6.What is the company's CM ratio? If monthly sales increase by $81,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

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