Pringle Company distributes a single product. The companys sales and expenses for a recent month follow:
|
Total |
Per Unit |
| Sales |
$ |
316,000 |
|
$ |
20 |
| Variable expenses |
|
221,200 |
|
|
14 |
|
|
|
|
|
|
| Contribution margin |
|
94,800 |
|
$ |
6 |
| Fixed expenses |
|
75,000 |
|
|
|
|
|
|
|
|
|
| Net operating income |
$ |
19,800 |
|
|
|
|
|
|
|
|
|
|
1. What is the monthly break-even point in units sold and in sales dollars?
|
|
| Break-even point in unit sales |
units |
| Break-even point in sales dollars |
$ |
|
2. Without resorting to computations, what is the total contribution margin at the break-even point?
Total contribution margin $
3. How many units would have to be sold each month to earn a target profit of $30,000? Use the formula method.
Units sold
4. 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 |
$ |
% |
|
5. What is the companys CM ratio? If monthly sales increase by $79,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
|
|
| CM ratio |
% |
| Net operating income increases by |
$ |
|
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