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Molander Corporation is a distributor of a sun umbrella used atresort hotels. Data concerning the next month’s budget appearbelow:

Selling price		$27	per unit
Variable expenses		$12	per unit
Fixed expenses		$12,300	per month
Unit sales		970	units per month

Required:
1.	Compute the company’s margin of safety. (Do not roundintermediate calculations.)

     
  

2.	Compute the company’s margin of safety as a percentage of itssales. Round your percentage answer to 2 decimal places(i.e .1234 should be entered as 12.34).

     

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

	Total			Per Unit
Sales	$	310,000		$	20
Variable expenses		217,000			14
Contribution margin		93,000		$	6
Fixed expenses		76,800
Net operating income	$	16,200

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 earn atarget profit of $34,200? Use the formula method.

        

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

         

4.	Refer to the original data. Compute the company's margin ofsafety in both dollar and percentage terms. Round yourpercentage answer to 2 decimal places (i.e .1234 should be enteredas 12.34).

        

5.	What is the company’s CM ratio? If monthly sales increase by$56,000 and there is no change in fixed expenses, by how much wouldyou expect monthly net operating income to increase?

        

Engberg Company installs lawn sod in home yards. The company’smost recent monthly contribution format income statementfollows:

   

		Amount	Percent of Sales
Sales	$	143,000	100%
Variable expenses		57,200	40%
Contribution margin		85,800	60%
Fixed expenses		17,000
Net operating income	$	68,800

   

Required:
1.	Compute the company’s degree of operating leverage.(Round your answer to 2 decimal places.)

     

2.	Using the degree of operating leverage, estimate the impact onnet operating income of a 16% increase in sales. (Roundyour intermediate calculations to 2 decimal places. Round yourpercentage answer to 2 decimal places (i.e .1234 should be enteredas 12.34).)

         

3.	Construct a new contribution format income statement for thecompany assuming a 16% increase in sales.