Reference no: EM13509239

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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