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28 Sep 2019
Menlo Company distributes asingle product. The companyâs sales and expenses for last monthfollow:
Total Per Unit Sales $ 640,000 $ 40 Variableexpenses 448,000 28 Contributionmargin 192,000 $ 12 Fixed expenses 152,400 Net operatingincome $ 39,600 1.) Compute the company's margin of safety in both dollar andpercentage terms. Round your percentage answer to 2 decimalplaces (i.e .1234 should be entered as 12.34).
2.) What is the companyâs CM ratio? If monthly sales increase by$85,000 and there is no change in fixed expenses, by how much wouldyou expect monthly net operating income to increase?
| Menlo Company distributes asingle product. The companyâs sales and expenses for last monthfollow: |
| Total | Per Unit | |||||||||||
| Sales | $ | 640,000 | $ | 40 | ||||||||
| Variableexpenses | 448,000 | 28 | ||||||||||
| Contributionmargin | 192,000 | $ | 12 | |||||||||
| Fixed expenses | 152,400 | |||||||||||
| Net operatingincome | $ | 39,600 | ||||||||||
| ||||||||||||
Nestor RutherfordLv2
28 Sep 2019