Lindo Company incurs annual fixed costs of $80,000. Variable costs for Lindos product are $40 per unit,

Question:

Lindo Company incurs annual fixed costs of $80,000. Variable costs for Lindo’s product are $40 per unit, and the sales price is $64 per unit. Lindo desires to earn an annual profit of $40,000.

Required
Use the ratio approach to determine the sales volume in dollars and units required to earn the desired profit.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...