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 $459,000 183,600 Per Unit $ 30 275,400 12 $ 18 220,320 $ 55,080 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in sales dollars $ 12,240 units 367,200 2. Without resorting to computations, what is the total contribution margin at the break-even point? Total contribution margin $ 220,320 3-a. How many units would have to be sold each month to earn a target profit of $91,800? Use the formula method. Units sold 17,340 units 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total Per unit Sales $ 520,200 $ 30 Variable expenses 208,080 12 Contribution margin 312,120 $ 18 Fixed expenses 220,320 Operating income S 91,800 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 $91,800? (Round the final answer to the nearest whole number.) Unit sales required units 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. (Round your percentage answer to 2 decimal places.) Dollars Percentage Margin of safety % 6. What is the company's CM ratio? If sales increase by $51,000 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 answer to 2 decimal places and other answer to the nearest whole dollar amount.) 6. What is the company's CM ratio? If sales increase by $51,000 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 answer to 2 decimal places and other answer to the nearest whole dollar amount.) 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 $459,000 183,600 Per Unit $ 30 275,400 12 $ 18 220,320 $ 55,080 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) Break-even point in unit sales Break-even point in sales dollars $ 12,240 units 367,200 2. Without resorting to computations, what is the total contribution margin at the break-even point? Total contribution margin $ 220,320 3-a. How many units would have to be sold each month to earn a target profit of $91,800? Use the formula method. Units sold 17,340 units 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. Menlo Company Contribution Income Statement Total Per unit Sales $ 520,200 $ 30 Variable expenses 208,080 12 Contribution margin 312,120 $ 18 Fixed expenses 220,320 Operating income S 91,800 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 $91,800? (Round the final answer to the nearest whole number.) Unit sales required units 5. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms. (Round your percentage answer to 2 decimal places.) Dollars Percentage Margin of safety % 6. What is the company's CM ratio? If sales increase by $51,000 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 answer to 2 decimal places and other answer to the nearest whole dollar amount.) 6. What is the company's CM ratio? If sales increase by $51,000 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 answer to 2 decimal places and other answer to the nearest whole dollar amount.) CM ratio Monthly operating income increases by %
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Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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