I ONLY NEED HELP FINDING THE DOLLAR SALES NEEDED TO ATTAIN TARGET PROFIT. ALL TH
ID: 2339887 • Letter: I
Question
I ONLY NEED HELP FINDING THE DOLLAR SALES NEEDED TO ATTAIN TARGET PROFIT. ALL THE OTHER ANSWERS ARE CORRECT. THANK YOU.
Lindon Company is the exclusive distributor for an automotive product that sells for $28.00 per unit and has a CM ratio of 30%. The company's fixed expenses are $147,000 per year. The company plans to sell 19,500 units this year. Required: 1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $63,000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $2.80 per unit. What is the company's new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $63,000? 1. Variable expense per unit 2. Break-even point in units 19.60 17,500 $490,000 25,000 $700,000 13,125 $367,500 Break-even point in dollar sale 3. Unit sales needed to attain target profit Dollar sales needed to attain target profit 4. New break-even point in unit sales New break-even point in dollar sales Dollar sales needed to attain target profitExplanation / Answer
Sub point 4.
Dollar sales needed to attain a target profit of $63000.
Hence the revised variable expenses per unit will be $19.60- $2.80 = $16.80
2. Revised Gross margin will be $28-$16.80 = $11.20
3. Revised break even sales in units =(Fixed Expenses/Revised Gross Margin) = ($147000/$11.20) = 13125 units.
4.To earn profit of $63000, ($63000/$11.20) = 5625 units should be sold over and above the break even units, as at break-even point there will be no profit no loss situation.
Hence the total number of units to be sold= 13125+ 5625= 18750 units
5. Dollar sales will be 18750 units x $28 = $525000.
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