Menlo Company distributes a single product. The company’s salesand expenses for last month follow:Total...Menlo...

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Accounting

Menlo Company distributes a single product. The company’s salesand expenses for last month follow:

Total Per Unit
Sales $ 628,000 $ 40
Variable expenses 439,600 28
Contribution margin 188,400 $ 12
Fixed expenses 145,200
Net operating income $ 43,200

Required:
1. What is the monthly break-even point in unit sales and indollar sales?
2. Without resorting to computations, what is the totalcontribution margin at the break-even point?
3-a. How many units would have to be sold each month to attain atarget profit of $63,600?
3-b. Verify your answer by preparing a contribution formatincome statement at the target sales level.
4. Refer to the original data. Compute the company's margin ofsafety in both dollar and percentage terms.
5. What is the company’s CM ratio? If sales increase by $87,000per month and there is no change in fixed expenses, by how muchwould you expect monthly net operating income to increase?

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In: AccountingMenlo Company distributes a single product. The company’s salesand expenses for last month follow:Total...Menlo Company distributes a single product. The company’s salesand expenses for last month follow:TotalPer UnitSales$628,000$40Variable expenses439,60028Contribution margin188,400$12Fixed expenses145,200Net operating income$43,200Required:1. What is the monthly break-even point in unit sales and indollar sales?2. Without resorting to computations, what is the totalcontribution margin at the break-even point?3-a. How many units would have to be sold each month to attain atarget profit of $63,600?3-b. Verify your answer by preparing a contribution formatincome statement at the target sales level.4. Refer to the original data. Compute the company's margin ofsafety in both dollar and percentage terms.5. What is the company’s CM ratio? If sales increase by $87,000per month and there is no change in fixed expenses, by how muchwould you expect monthly net operating income to increase?

	Total		Per Unit
Sales	$	628,000	$	40
Variable expenses		439,600		28
Contribution margin		188,400	$	12
Fixed expenses		145,200
Net operating income	$	43,200