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Thanks for all the help. Heres another question they had me


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?

  Total contribution margin $   

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.)


        Dollars   Percentage   
  Margin of safety $     %  

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?


   
  CM ratio  %  
  Net operating income increases by $       




1

 

Break even in units

 

Break even in $ $ 12,000

 

240,000 2

 

Equal to fixed cost $ 72,000 Total CM 3

 

17,600 units

 

4

 

Margin of safety $

 

Margin of safety % $ 74,000

 

23.57% 5

 

CM Ratio

 

Net Operating income...

 


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[solution] »

Thanks for all the help. Heres another question they had me


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