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 $34.00
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 $34.00 per unit and has a CM ratio of 39%. The companys fixed expenses are $145,860 per year. The company plans to sell 12,000 units this year. |
Required:
1. | What are the variable expenses per unit? (Round your answer to 2 decimal places.) |
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2. | Use the equation method: |
a. | What is the break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) |
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b. | What amount of unit sales and dollar sales is required to earn an annual profit of $66,300? (Do not round intermediate calculations.)
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c. | Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.10 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.) |
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b. |
What amount of unit sales and dollar sales is required to earn an annual profit of $66,300? (Do not round intermediate calculations.)
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