Question

Lindon Company is the exclusive distributor for an automotive product that sells for $24.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $118,800 per year. The company plans to sell 18,100 units this year.

Required:

1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.)

2. What is the break-even point in unit sales and in dollar sales?

3. What amount of unit sales and dollar sales is required to attain a target profit of $46,800 per year?

4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $2.40 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $46,800?

Answer 1