Help Save &Exit; Check myw Total Per Unit 320,000 20 Sales Variable expenses Con
ID: 2546972 • Letter: H
Question
Help Save &Exit; Check myw Total Per Unit 320,000 20 Sales Variable expenses Contribution margin Fixed expenses 224,000 96,000 72,600 $ 23,400 14 Net operating income Required: 1. What is the monthly break-even point in unit sales and in dollar sales? ok nt 2. Without resorting to computations, what is the total contribution margin at the break-even point? ences 3-a. How many units would have to be sold each month to attain a target profit of $30,600? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms 5. What is the company's CM ratio? If sales increase by $55,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Req 38 Req 4 Req 5 Req 1 Req 2 Req 3A What is the monthly break-even point in unit sales and in dollar sales? Broak oven point in unit sales Break even point in dollar salesExplanation / Answer
1.
Contribution margin percentage = Contribution margin per unit / Selling price per unit
= 6 / 20
= 30%
Breakeven point in unit sales = Fixed costs / Contribution margin per unit
= 72,600 / 6
= 12,100
Breakeven point in dollar sales = Fixed costs / Contribution margin percentage
= 72,600 / 30%
= 242,000
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2.
Total contribution margin at breakeven point = 12,100 units * 6 per unit
= 72,600
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3-a
Units sales needed to attain target profit = (Fixed costs + Target profit) / Contribution margin per unit
= (72,600 + 30,600) / 6
= 17,200
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3-b
Menlo Company
Contribution Income statement
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4.
Margin of safety in dollars = Planned sales - Breakeven sales
= 320,000 - 242,000
= 78,000
Margin of safety percentage = Margin of safety / planned sales
= 78,000 / 320,000
= 24.375%
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5.
Contributiuon margin ratio = Contributuion margin per unit / Selling price per unit
= 6 / 20
= 30%
Total sales after increase = 320,000 + 55,000 = 375,000
Contribution margin = 375,000 * 30% = 112,500
Net operating income = Contribution margin - Fixed expenses
= 112,500 - 72,600
= 39,900
Net operating income increase by 16,500 (39,900 - 23,400)
Total Per unit Sales 344,000 (17,200*20) 20 Variable expenses 240,800 (17,200*14) 14 Contribution margin 103,200 (344,000 - 240,800) 6 Fixed expenses 72,600 Net operating income 30,600Related Questions
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