Problem 4-22 Break-Even Analysis; Target Profit Analysis; Margin of Safety; CM Ratio [LO1, LO3, LO5,...
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Problem 4-22 Break-Even Analysis; Target Profit Analysis; Margin of Safety; CM Ratio [LO1, LO3, LO5, LO6, LO7] Menlo Company distributes a single product. The company's sales and expenses for last month follow: 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 $90,000 ? Use the formula method. Skip Question 3-b and 4 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. 6. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase
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