3.

Lindon Company is the exclusive distributor for an automotive product that sells for $18.00 per unit and has a CM ratio of 30%. The companys fixed expenses are $92,340 per year. The company plans to sell 13,200 units this year.

Required:

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

2.	Use the equation method:

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

b.	What amount of unit sales and dollar sales is required to earn an annual profit of $27,000?

c.	Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $1.80 per unit. What is the companys new break-even point in unit sales and in dollar sales?

3.	Repeat (2) above using the formula method.

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

b.	What amount of unit sales and dollar sales is required to earn an annual profit of $27,000?

c.	Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $1.80 per unit. What is the companys new break-even point in unit sales and in dollar sales?