# 6 award 250 out of 250 points menlo company

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6.Award: 2.50 out of 2.50 pointsMenlo Company distributes a single product. The company’s sales and expenses for last month follow:TotalPer UnitSales\$308,000\$ 20Variable expenses215,60014Contribution margin92,400\$6Fixed expenses75,000Net operating income\$ 17,400Required:1. What is the monthly break­even point in unit sales and in dollar sales?
2. Without resorting to computations, what is the total contribution margin at the break­even point?
3­a. How many units would have to be sold each month to earn a target profit of \$30,600? Use the formulamethod.3­b. Verify your answer by preparing a contribution format income statement at the target sales level.
\$\$\$\$Menlo CompanyContribution Income StatementTotalPer unitSales352,00020Variable expenses246,40014Contribution margin105,6006Fixed expenses75,000Net operating income30,6004. Refer to the original data. Compute the company's margin of safety in both dollar and percentageterms.Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34).
5. What is the company’s CM ratio? If monthly sales increase by \$99,000 and there is no change in fixedexpenses, by how much would you expect monthly net operating income to increase?\$CM ratio30%Net operating income increases by29,700
Garrison 15e Recheck 2014­12­17ReferencesWorksheetLearning Objective:05­03 Use thecontribution marginratio (CM ratio) tocompute changes incontribution marginand net operatingincome resultingfrom changes insales volume.Learning Objective: 05­06 Determine thelevel of sales needed to achieve adesired target profit.
LearningObjective: 05­01 Explain howchanges inactivity affectcontributionmargin and netoperatingincome.Learning Objective:05­05 Determine thebreak­even point.Learning Objective: 05­07 Compute themargin of safety and explain itssignificance.Menlo Company distributes a single product. The company’s sales and expenses for last month follow:TotalPer UnitSales\$308,000\$ 20Variable expenses215,60014Contribution margin92,400\$6Fixed expenses75,000Net operating income\$ 17,400Required:

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Term
Spring
Professor
Wargo
Tags
Miller Company