Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 40%. The company's fixed expenses are $264,000 per year. The company plans to sell 17,000 units this year.

Required:

1. What are the variable expenses per unit?

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 $70,000?

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the company's new break-even point in unit sales and in dollar sales?

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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 $70,000?

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the company's new break-even point in unit sales and in dollar sales?