Required: 1. What is the monthly break-even point in unit sales. 2. What is the total contribution margin at the break-even point? 3. How many units would have to be sold each month to attain a target profit of $56,400? 4. Refer to the original data. Compute the company's margin of safety in dollar terms. 5. If sales increase by $90,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
Required: 1. What is the monthly break-even point in unit sales. 2. What is the total contribution margin at the break-even point? 3. How many units would have to be sold each month to attain a target profit of $56,400? 4. Refer to the original data. Compute the company's margin of safety in dollar terms. 5. If sales increase by $90,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:a. Only whole numbers are to be entered as answers. Therefore, DO NOT put any signs in such as $, %, #, or a comma etc. in your answer. For example, if your answer is $1234 you should write 1234 as your
answer and if your answer is 4%, write 4 as your answer.
b. Indicate a negative number by putting a minus sign in front. Therbfore, if your answer is negative 1234 you need to post -1234 as your answer.
c. Round your answer to the nearest whole number, I.e. no decimal points. So if your answer is 1234.60 you should write 1235.
Menlo Company distributes a single product. The company's sales and expenses for last month follow:
Total
Per Unit
Sales
$ 628,000
40
Variable expenses
439,600
28
Contribution margin
188,400
%24
12
Fixed expenses
150,000
Net operating income
$ 38,400
Required:
1. What is the monthly break-even point in unit sales.
2. What is the total contribution margin at the break-even point?
3. How many units would have to be sold each month to attain a target profit of $56,400?
4. Refer to the original data. Compute the company's margin of safety in dollar terms.
5. If sales increase by $90,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
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