# ACC – Pringle Company

SalesVariable ExpensesContribution marginFixed ExpensesNet operating incomeTotalPer Unit\$600,000.00\$40.00\$420,00028\$180,000.00\$12.00\$150,000\$30,000.001Unit sales to break evenUnit sales in dollars1250050000023 18000=\$12xQ-\$150,00012xQ=\$18,000+150,000=168,000168000/1214,000 need to be sold4 SalesBreak even salesMargin in Safety \$\$Margin safety %5 CM RatioSalesVariable ExpensesContribution marginFixed ExpensesNet operating income600,000500,000100,00016.67%30.00%PresentExpected Increase\$600,000.00 \$680,000 \$80,000.00\$420,000 \$476,000 \$56,000.00\$180,000.00 \$204,000 \$24,000.00\$150,000 \$150,000\$0.00\$30,000.00\$54,000 \$24,000.00Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:Pringle Company distributes a single product. The company’s sales and expenses for a recent month follow:p. 216Required:1. What is the monthly break-even point in units sold and in sales dollars?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 by preparing a contribution format income statement at the target level of sales.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 muchwould you expect monthly net operating income to increase?