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What is the monthly break-even point in units sold

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Pringle Company distributes a single product. The company's sales and expenses for a recent month follow:

  Total    Per Unit
  Sales $ 314,000    $ 20     
  Variable expenses   219,800     14     
 
  Contribution margin   94,200    $ 6     
  Fixed expenses   72,000  
     
  Net operating income $   22,200      
     

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?

3. How many units would have to be sold each month to earn a target profit of $33,600? 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.)

5. What is the company's CM ratio? If monthly sales increase by $75,000 and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?

Reference no: EM131771383

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