Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales...
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Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Operating income Total $450,000 180,000 270,000 216,000 $ 54,000 Per Unit $ 30 12 $ 18 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total 4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month for an after-tax target profit of $90,000? (Round the final answer to the nearest whole number.) Unit sales required Per unit units 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. Margin of safety Dollars Percentage % 6. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? CM ratio Monthly operating income increases by % Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Operating income Total $450,000 180,000 270,000 216,000 $ 54,000 Per Unit $ 30 12 $ 18 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total 4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month for an after-tax target profit of $90,000? (Round the final answer to the nearest whole number.) Unit sales required Per unit units 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. Margin of safety Dollars Percentage % 6. What is the company's CM ratio? If sales increase by $50,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? CM ratio Monthly operating income increases by %
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Contribution format Income statement 3b Target sales ... View the full answer
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt , Eugene F. Brigham
Posted Date:
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