I am having the most difficult understanding question #3........

Lindon Company is the exclusive distributor for an automotive product that sells for $33.00 per unit and has a CM ratio of 30%. The companys fixed expenses are $198,990 per year. The company plans to sell 9,200 units this year. Required:

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

Variable expense _________ per unit

2. Use the equation method:

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

Break even point in unit sales ________________

Break even point in dollar sales ______________

b. What amount of unit sales and dollar sales is required to earn an annual profit of $49,500?

Sales level in units ___________

Sales level in dollars __________

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.30 per unit. What is the companys new break-even point in unit sales and in dollar sales?

New break even point in unit sales ____________

New break even point 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?

Break even point in units ___________

Break even point in dollar sales ______

b. What amount of unit sales and dollar sales is required to earn an annual profit of $49,500?

Sales level in units __________

Sales level in dollars _________

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.30 per unit. What is the companys new break-even point in unit sales and in dollar sales?

New break even point in unit sales _______________

New break even point in dollar sales _____________