## Description

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

p. 216

Required:

1 What is the monthly break-even point in units sold and in sales dollars?

2 Without resorting to computations, what is the total contribution margin at the break-even point?

How many units would have to be sold each month to earn a target profit of $18,000? Use the formula method. Verify your answer

3 by preparing a contribution format income statement at the target level of sales.

4 Refer to the original data. Compute the company’s margin of safety in both dollar and percentage terms.

What is the company’s CM ratio? If monthly sales increase by $80,000 and there is no change in fixed expenses, by how much

5 would you expect monthly net operating income to increase?

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