Menlo Company distributes a single product. The companys sales and expenses for last month follow:...
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Menlo Company distributes a single product. The companys sales and expenses for last month follow: Total Per Unit Sales. . . . . . . . . . . . . . . . . . . . . . . . $450,000 $30 Variable expenses . . . . . . . . . . . . . 180,000 12 Contribution margin . . . . . . . . . . . . 270,000 $18 Fixed expenses. . . . . . . . . . . . . . . . 216,000 Net operating income . . . . . . . . . . . $ 54,000 Required: 1. What is the monthly break-even point in units sold and in sales dollars? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3. How many units would have to be sold each month to earn a target profi t of $90,000? Use the formula method. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the companys margin of safety in both dollar and percent- age terms. 5. What is the companys CM ratio? If sales increase by $50,000 per month and there is no change in fi xed expenses, by how much would you expect monthly net operating income to increase?
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