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Homework answers / question archive / Wesley Company manufactures and sells a single product

Wesley Company manufactures and sells a single product. The company's income statement at sales level of 30,000 units for last quarter follows:

TotalSales$300,000 Less: Variable expenses 180,000 Contribution margin 120,000 Less: Fixed expenses 56,000 Net operating income$64,000

**Required:**

**1.** What is the monthly break-even point in units sold and in sales dollars? **(Round your intermediate calculations and final answers to the nearest whole number.)**

**2. **Without resorting to computations, calculate the total contribution margin at the break-even point for the quarter.

**3-a. **How many units would have to be sold each quarter to earn a target profit of $14,400? Use the formula method.

**3-b. **Verify your answer 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 for the quarter in units, in dollars and as a percentage of last quarter's sales.** (Round "Percentage" answer to 1 decimal place, (i.e., 0.123 should be considered as 12.3%).)**

**5. **What is the company's CM ratio? If quarterly sales decrease by $12,000 and there is no change in fixed expenses, what would you expect the quarter's net operating income to be? ( an income statement; use the CM ratio to compute your answer.)

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