Total Per Unit Sales $ 318,000 $ 20 Variable expenses 222,600 14 Contribution margin 95,400 $ 6 Fixed expenses 72,600 Net operating income $ 22,800 Required: 1. What is the monthly break-even point in unit...

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Accounting

Total Per Unit
Sales $ 318,000 $ 20
Variable expenses 222,600 14
Contribution margin 95,400 $ 6
Fixed expenses 72,600
Net operating income $ 22,800

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 $39,600?
3-b. Verify your answer by preparing a contribution formatincome statement at the target sales level. (confused on this)
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 $99,000per month and there is no change in fixed expenses, by how muchwould you expect monthly net operating income to increase?

Answer & Explanation Solved by verified expert

4.0 Ratings (585 Votes)

1 Monthly breakeven point in unit sales and in dollar sales Description Amount Per unit Sales 318000 20 Less Variable Cost 222600 14 Contribution Margin 95400 6 Contribution Margin ratio Contributin MarginSales 30 30 Fixed Costs 72600 72600 Break even point in units Fixed CostsContribution Margin per unit 12100 See Answer

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Total			Per Unit
Sales	$	318,000		$	20
Variable expenses		222,600			14
Contribution margin		95,400		$	6
Fixed expenses		72,600
Net operating income	$	22,800