Menlo Company distributes a single product. The company's sales and expenses for last month follow Sales Variable expenses Fixed expenses Total $620,000 Per Unit $40 434,000 28 Contribution margin 186,000 $12 152,400 Net operating income $ 33,600 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 attain a target profit of $63,600? 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 sales increase by $55,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3A ЗА Req 38 Req 4 Req 5 What is the monthly break-even point in unit sales and in dollar sales? Break-even point in unit sales units Break-even point in dollar sales Req 2 >
Menlo Company distributes a single product. The company's sales and expenses for last month follow Sales Variable expenses Fixed expenses Total $620,000 Per Unit $40 434,000 28 Contribution margin 186,000 $12 152,400 Net operating income $ 33,600 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 attain a target profit of $63,600? 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 sales increase by $55,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3A ЗА Req 38 Req 4 Req 5 What is the monthly break-even point in unit sales and in dollar sales? Break-even point in unit sales units Break-even point in dollar sales Req 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Menlo Company distributes a single product. The company's sales and expenses for last month follow
Sales
Variable expenses
Contribution margin
Total
$620,000
Per Unit
$40
434,000
28
186,000
$12
Fixed expenses
152,400
Net operating income
$ 33,600
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 attain a target profit of $63,600?
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 sales increase by $55,000 per month and there is no change in fixed expenses, by how much
would you expect monthly net operating income to increase?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3A
3A
Req 38
Req 4
Req 5
What is the monthly break-even point in unit sales and in dollar sales?
Break-even point in unit sales
units
Break-even point in dollar sales
Req 2 >
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Step 1: Introduction to breakeven point and contribution margin
VIEWStep 2: Part 1 computation of breakeven point in unit and dollars
VIEWStep 3: Calculation of total contribution margin at the break-even point if Without resorting to computation
VIEWStep 4: Computation of number of units to be sold to achieve Desired profit
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