Exercise 5-14 (Algo) Break-Even and Target Profit Analysis [LO5-1, LO5-4, LO5-6, LO5-7]

Lindon Company is the exclusive distributor for an automotive product selling for $30.00 per unit with a CM ratio of 30%. The companys fixed expenses are $162,000 per year and it plans to sell 20,200 units this year.

Required:

1. What are the variable expenses per unit?

Note: Round your "per unit" answer to 2 decimal places.

1. What is the break-even point in unit sales and in dollar sales?
2. What amount of unit sales and dollar sales is required to attain a target profit of $72,000 per year?
3. Assume by using a more efficient shipper, the company can reduce its variable expenses by $3.00 per unit. What is the companys new break-even point in unit sales and dollar sales? What dollar sales are required to attain a target profit of $72,000?

\begin{tabular}{|l|l|} \hline 1. Variable expense per unit & \\ \hline 2. Break-even point in units & \\ \hline 2. Break-even point in dollar sales & \\ \hline 3. Unit sales needed to attain target profit & \\ \hline 3. Dollar sales needed to attain target profit & \\ \hline 4. New break-even point in unit sales & \\ \hline 4. New break-even point in dollar sales & \\ \hline 4. Dollar sales needed to attain target profit \\ \hline \end{tabular}