| Pringle Company distributes a single product. The company%u2019s sales and expenses for a recent month follow: |
| Total | Per Unit | ||||
| Sales | $ | 316,000 | $ | 20 | |
| Variable expenses | 221,200 | 14 | |||
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| Contribution margin | 94,800 | $ | 6 | ||
| Fixed expenses | 75,000 |
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| Net operating income | $ | 19,800 | |||
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| 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 | $ |
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| 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 | $ | % |
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| 5. |
What is the company%u2019s 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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