omework- Chapter 5 Help Save & Exit 10 Exercise 5-14 Break-Even and Target Profi

Question

omework- Chapter 5 Help Save & Exit 10 Exercise 5-14 Break-Even and Target Profit Analysis [LOS-3, LO54, LOSS, LO5-6) Undon Company is the exclusive dstrbutor fr an automotive product that sells for SS000 per unit and has a CM ratio of 30%. The company's ixed expenses are $345.000 per year. The company plans to sell 27,200 units this year 1 What are the varisble expenses per unit? 2. What is the break-even point in unit sales and in dolilar sales? 3 What amount of unit sales and dollar sales is required to attain a target profit of $195000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce ts variable expenses by $5.00 per unit. What is the company's new break -even point in unit sales and in doilar sales? Dollar sales needed to atian taget prof New break-even point in dolar saes MacBook Air 20

Explanation / Answer

1 Variable expense per unit= 50*(1-0.3) = $35 2 Break even point in units = 345000/15= 23000 Break even point in dollar sales = 345000/30%= 1150000 3 Unit sales needed=(345000+195000)/15= 36000 Dollar sales needed=(345000+195000)/30%= 1800000 4 Variable expense per unit= 35-5 = $30 CM ratio = (50-30)/50 = 40% New Break even point in units = 345000/(15+5)= 17250 Break even point in dollar sales = 345000/40%= 862500 Dollar sales needed=(345000+195000)/40%= 1350000

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