Lindon Company is the exclusive distributor for an automotive product that sells for $45 per unit and has a CM ratio of 20%. The companys fixed expenses are $108,000 per year. The company plans to sell 14,000 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 $63,000?

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $9 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 $63,000?

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $9 per unit. What is the companys new break-even point in unit sales and in dollar sales?