Chapter 5 HW 2. 10.00 points Menlo Company distrbutes a single product. The comp

Question

Chapter 5 HW 2. 10.00 points Menlo Company distrbutes a single product. The company's sales and expenses for last month follow 310,000 $ 20 14 Sales Variable expenses Contribution margin Flxed expenses 217000 93,000 $ 6 4 400 Net operating income $ 18,600 Required 1 What is the monthly break-even point in unit sales and in doilar sales? Break-even point in unit sales Break-even point in sales dollars 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have to be sold each month to eam a target proft of $31,200? Use the fomula method O Type here to search

Explanation / Answer

1 Break even point in unit sales=74400/6= $12400 Break-even point in sales dollars = 12400*20 = $248000 2 Total contribution margin = $74400 3 Units sold=(74400+31200)/6= 17600 3b Total Per unit Sales 352000 20 Variable expenses 246400 14 Contribution margin 105600 6 Fixed expenses 74400 Net operating income 31200 4 Margin of safety dollars = 310000-248000= $62000 Margin of safety percentage=62000/310000 = 20% 5 CM ratio = 6/20= 30% Net operating income increases by $ 24000(80000*30%)

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