Question
Lindon Company is the exclusive distributor for an automotive product that sells for $34.50 per unit and has a CM ratio of 30%. The companys
Lindon Company is the exclusive distributor for an automotive product that sells for $34.50 per unit and has a CM ratio of 30%. The companys fixed expenses are $211,140 per year. The company plans to sell 8,800 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 $51,750? |
| c. | Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.45 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 $51,750? |
| c. | Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.45 per unit. What is the companys new break-even point in unit sales and in dollar sales? |
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Cima Official Exam Practice Kit Fundamentals Of Ethics Corporate Governance And Business Law Certificate In Business Accounting
Authors: Larry Mead
4th Edition
1856177092, 978-1856177092
