Need help! Menlo Company distributes a single product. The company\'s sales and
ID: 2372484 • Letter: N
Question
Need help!
Menlo Company distributes a single product. The company's sales and expenses for last month follow: What is the monthly break-even point in units sold and in sales dollars? (Omit the "$" sign in your response.) Without resorting to computations, what is the total contribution margin at the break-even point? (Omit the "$" sign in your response.) How many units would have to be sold each month to earn a target profit of $100,800? Use the formula method. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. (Round your percentage value to 2 decimal places. Omit the "$" and "%" signs in your response.) What is the company's CM ratio? If sales increase by $52,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? (Round your percentage value to nearest whole percent. Round your dollar value to the nearest dollar amount. Omit the "$" and "%" signs in your response.)Explanation / Answer
Requirement 1
Break even point (in Units) = 268800/21=12800 unit
The break even sales(in $)= 70*12800= $ 896,000
Requirement 2
Contribution margin = $ 21 per unit
Total contribution margin at break even point = 21*12800 = $ 268,800
Requirement 3
No of unit to be sold to achieve target profit (in Units) = (268800+100800)/21=17600 unit
Requirement 4.
Margin of safety = total sales - break even sales = $ 1,106,000-$ 896,000 = $ 210,000
% Margin of safety = (margin of safety/total sale)*100 = 210,000/1106000 *100 = 18.99%
Requirement 5
CM ratio = 21/70 = 30%
if CM ratio is 30% and increase in sales is $52000 and there is no increase in fixed cost
increase in operating income = CM ratio* increase in sales = 52000*30% = $15,600
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