Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total Per Unit Sales $ 636,000 $ 40 Variable expenses 445,200 28 Contribution margin 190,800 $ 12 Fixed expenses 156,000 Net operating income $ 34,800
a. How many units would have to be sold each month to earn a target profit of $60,000? Use the formula method.
b. Verify your answer by preparing a contribution format income statement at the target sales level.