Menlo Company Distributes A Single Product. The Compan

E4-12  Menlo Company distributes a single product. The company’s sales and expenses for last month follow:


Total Per Unit

Sales $1,092,000   $70

Variable expenses 764,400   49

Contribution margin 327,600   $21

Fixed expenses 264,600

Net operating income $63,000


What is the monthly break-even point in units sold and in sales dollars? (Omit the “$” sign in your response.)


Requirement 2:

Without resorting to computations, what is the total contribution margin at the break-even point? (Omit the “$” sign in your response.)


Requirement 3:

How many units would have to be sold each month to earn a target profit of $96,600? Use the formula method.

Units sold  units


Requirement 4:

Refer to the original data. Compute the company’s margin of safety in both dollar and percentage terms. (Round your percentage value to 2 decimal places. Omit the “$” and “%” signs in your response.)

Dollars Percentage Margin of safety $  %


Requirement 5: What is the company’s CM ratio? If sales increase by $91,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?(Omit the “$” and “%” signs in your response.)

CM ratio  %



Increased net operating income $

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