Pringle Company distributes a single product. The company's sales and expenses for a recent month follow: Total Per Unit Sales $ 600,000 $40 Variable expenses 420,000 28 Contribution margin 180,000 $12 Fixed expenses 150,000 Net operating income $ 30,000
Required:
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? $ Dollars
3. How many units would have to be sold each month to earn a target profit of $18,000? 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 1 decimal place.) Margin of safety. Dollars? Percentage?
5. What is the company's CM ratio? If monthly sales increase by $80,000 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 $