Question
Exercise 5-14 Break-Even and Target Profit Analysis [LO5-3, LO5-4, LO5-5, LO5-6] Lindon Company is the exclusive distributor for an automotive product that sells for $49.00
Exercise 5-14 Break-Even and Target Profit Analysis [LO5-3, LO5-4, LO5-5, LO5-6]
| Lindon Company is the exclusive distributor for an automotive product that sells for $49.00 per unit and has a CM ratio of 32%. The companys fixed expenses are $392,000 per year. The company plans to sell 26,000 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? (Do not round intermediate calculations.) |
| b. | What amount of unit sales and dollar sales is required to earn an annual profit of $78,400? (Do not round intermediate calculations.) |
| c. | Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4.10 per unit. What is the companys new break-even point in unit sales and in dollar sales? (Do not round intermediate calculations. Round up break even point answers to the nearest whole number.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started