Exercise $2-18($Algo$)$ Break$-$Even and Target Profit Analysis; Margin of Safety; CM Ratio $[$LO$2-1,$ LO$2-3,$

L$02-5,$ L$02-6,$ LO$2-7]$

Menlo Company distributes a single product. The company's sales and expenses for last month follow:

Required:

What is the monthly break$-$even point in unit sales and in dollar sales?

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 attain a target profit of $$28,200?$

$3-$b$.$ Verify your answer by preparing a contribution format income statement at the target sales level.

Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.

What is the company's CM ratio? If the company can sell more units thereby increasing sales by $$70,000$ per month and there is no

change in fixed expenses, by how much would you expect monthly net operating income to increase?

Answer is not complete.

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