Question
Lindon Company is the exclusive distributor for an automotive product that sells for $52.00 per unit and has a CM ratio of 30%. The companys
Lindon Company is the exclusive distributor for an automotive product that sells for $52.00 per unit and has a CM ratio of 30%. The companys fixed expenses are $366,600 per year. The company plans to sell 27,900 units this year.
Required:
What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.)
What is the break-even point in unit sales and in dollar sales?
What amount of unit sales and dollar sales is required to attain a target profit of $210,600 per year?
Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.20 per unit. What is the companys new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $210,600?
________________________________________________________________________________________________
Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations:
Variable costs per unit: | |
---|---|
Manufacturing: | |
Direct materials | $ 10 |
Direct labor | $ 4 |
Variable manufacturing overhead | $ 1 |
Variable selling and administrative | $ 1 |
Fixed costs per year: | |
Fixed manufacturing overhead | $ 231,000 |
Fixed selling and administrative | $ 141,000 |
During the year, the company produced 21,000 units and sold 17,000 units. The selling price of the companys product is $40 per unit.
Required:
1. Assume that the company uses absorption costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
2. Assume that the company uses variable costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
1A Compute the unit product cost. Assume that the company uses absorption costing.
1B Prepare an income statement for the year. Assume that the company uses absorption costing.
2A Compute the unit product cost. Assume that the company uses variable costing.
2B Prepare an income statement for the year. Assume that the company uses variable costing.
\begin{tabular}{|l|} \hline 1. Variable expense per unit \\ \hline 2. Break-even point in units \\ \hline 2. Break-even point in dollar sales \\ \hline 3. Unit sales needed to attain target profit \\ \hline 3. Dollar sales needed to attain target profit \\ \hline 4. New break-even point in unit sales \\ \hline 4. New break-even point in dollar sales \\ \hline 4. Dollar sales needed to attain target profit \\ \hline \end{tabular} Unit product cost \begin{tabular}{|l|l|} \hline Lynch Company \\ \hline Absorption Costing Income Statement \\ \hline & \\ \hline & \\ \hline \hline \end{tabular} Unit product cost
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