Pringle company distributes a single product the companys, Ask an Expert

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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	$	304,000	$	20
Variable expenses		212,800		14

Contribution margin		91,200	$	6
Fixed expenses		75,600

Net operating income	$	15,600

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 $36,000? 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 company's CM ratio? If monthly sales increase by $64,000 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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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9956024

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