Lindon Company is the exclusive distributor for an automotive product that sells

Question

Lindon Company is the exclusive distributor for an automotive product that sells for $54.00 per unit and has a CM ratio of 30%. The company's fixed expenses are $388,800 per year. The company plans to sell 28,600 units this year. Required 1. What are the variable expenses per unit? 2. What is the break-even point in unit sales and in dollar sales? 0259273. What amount of unit sales and dollar sales is required to attain a target profit of $226,800 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.40 per unit. What is the company's new break-even point in unit sales and in dollar sales? What is the sales required to achieve the same target profit as requirement 3? 1. Variable expense per unit 2. Break-even point in units Break-even point in dollar sale 3. Unit sales needed to attain target profit Dollar sales needed to attain target profit 4. New break-even point in unit sales New break-even point in dollar sales Doller sales needed to attain target profit

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount 1) Sales price per unit                        54.00 CM Ratio 30% Contribution margin per unit                        16.20 Variable expense per unit = 54 - 16.20                        37.80 2) Fixed costs              388,800.00 Break even point in units = 388,800/16.20                24,000.00 Break even point in $ = 388,800/30%          1,296,000.00 3) Profit desired              226,800.00 Fixed costs              388,800.00 Desired contribution              615,600.00 Unit sales = 615,600/16.20                38,000.00 $ Sales= 615,600/30%          2,052,000.00 4) Sales price per unit                        54.00 Variable expense per unit = 37.80 - 5.40                        32.40 Cntribution per unit = 54 - 32.40                        21.60 CM Ratio = 21.60/54 40.00% Fixed costs              388,800.00 Break even point in units = 388,800/21.60                18,000.00 Break even point in $ = 388,800/40%              972,000.00 Profit desired              226,800.00 Fixed costs              388,800.00 Desired contribution              615,600.00 Dollar sales = 615,600/40%          1,539,000.00

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