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