Lin Corporation has a single product whose selling price is $136 and whose varia

Question

Lin Corporation has a single product whose selling price is $136 and whose variable expense is $68 per unit. The company’s monthly fixed expense is $32,000.

Required 1. Using the equation method, determine for the unit sales that are required to earn a target profit of $7,100 Hints References eBook & Resources Hint#1 Check my work value: 0.50 points 2. Using the formula method, determine for the unit sales that are required to earn a target profit of $9,200. (Round your answer to the nearest whole number.)

Explanation / Answer

Contribution margin=Selling price-Variable Cost

=(136-68)=$68 per unit

1.Target profits=(Contribution margin/unit*Number of units sold)-Fixed costs

7100=(68*Units sold)-32000

Hence unit sold=(7100+32000)/68

which is equal to

=575 units

2.

Target sales=(Fixed expenses+Target profits)/Contribution margin

=(32000+9200)/68

which is equal to

=606 units(Approx).

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