Lindo Company incurs annual fixed costs of $52,250. Variable costs for Lindo’s p

Question

Lindo Company incurs annual fixed costs of $52,250. Variable costs for Lindo’s product are $31.20 per unit, and the sales price is $48.00 per unit. Lindo desires to earn an annual profit of $58,000.

Determine the sales volume in dollars and units required to earn the desired profit. (Do not round intermediate calculations and round your answers to the nearest whole number.)

Lindo Company incurs annual fixed costs of $52,250. Variable costs for Lindo’s product are $31.20 per unit, and the sales price is $48.00 per unit. Lindo desires to earn an annual profit of $58,000.

Explanation / Answer

Sales volume in dollars = Fixed cost + Target profit / contribution margin ratio

= 52250 + 58000 / 35% = 315000.

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