enlo Company distributes a single product. The company’s sales and expenses for last month follow:
Total | Per Unit | ||||
Sales | $ | 624,000 | $ | 40 | |
Variable expenses | 436,800 | 28 | |||
Contribution margin | 187,200 | $ | 12 | ||
Fixed expenses | 154,800 | ||||
Net operating income | $ | 32,400 | |||
Required:
1. What is the monthly break-even point in unit sales and in dollar sales?
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 earn a target profit of $61,200? Use the formula method.
3-b. Verify your answer by preparing a contribution format income statement at the target sales level.
4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month to an after-tax target profit of $61,200? (Round the final answer to the nearest whole number.)
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 (i.e .1234 should be entered as 12.34).)
6. What is the company’s CM ratio? If monthly sales increase by $71,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
1) Break even unit = 154800/12 = 12900 Units
Break even sales = 12900*40 = $516000
2) total contribution margin = $154800
3a) Required unit = (154800+61200)/12 = 18000 Units
3b) Contribution margin income statement
Sales (18000*40) | 720000 |
Variable cost (18000*28) | 504000 |
Contribution margin | 216000 |
Fixed cost | 154800 |
Net income | 61200 |
4) Income before tax = 61200*100/70 = 87429
Required unit = (154800+87429)/12 = 20186 Units
5) Margin of safety = 624000-516000 = 108000
Margin of safety percentage = 108000/624000 = 17.31%
6) CM ratio = 12/40 = 30%
Net operating income increase = 71000*30% = 21300
enlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ 624,000 436,800 187,200 145,200 $ 42,000 Per Unit $ 40 28 $ 12 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 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...
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
624,000
$
40
Variable expenses
436,800
28
Contribution margin
187,200
$
12
Fixed expenses
150,000
Net operating income
$
37,200
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
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...
Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ 624,000 436,800 187,200 145,200 $ 42,000 Per Unit $ 40 28 $ 12 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 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...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 318,000 $ 20 Variable expenses 222,600 14 Contribution margin 95,400 $ 6 Fixed expenses 76,200 Net operating income $ 19,200 . What is the monthly break-even point in unit sales and in dollar sales? Break even point in unit sales ? units Break even point is sales dollars ? 2. Without resorting to computations, what is...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 318,000 $ 20 Variable expenses 222,600 14 Contribution margin 95,400 $ 6 Fixed expenses 76,200 Net operating income $ 19,200 . What is the monthly break-even point in unit sales and in dollar sales? Break even point in unit sales ? units Break even point is sales dollars ? 2. Without resorting to computations, what is...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 302,000 $ 20 Variable expenses 211,400 14 Contribution margin 90,600 $ 6 Fixed expenses 72,000 Net operating income $ 18,600 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 320,000 $ 20 Variable expenses 224,000 14 Contribution margin 96,000 $ 6 Fixed expenses 75,000 Net operating income $ 21,000 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 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...
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Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 304,000 $ 20 Variable expenses 212,800 14 Contribution margin 91,200 $ 6 Fixed expenses 73,800 Net operating income $ 17,400 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 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...