Lin Corporation has a single product whose selling price is $140 per unit and wh

Question

Lin Corporation has a single product whose selling price is $140 per unit and whose variable expense is $70 per unit. The company's monthly fixed expense is $31,800 Required 1. Calculate the unit sales needed to attain a target profit of $6,700. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,600. (Round your intermediate calculations to the nearest whole number.) 1. Units sales to attain target profit 2. Dollar sales to attain target profit

Explanation / Answer

Answer of Part 1:

Let the required unit be X

Sales = Variable Expense + Fixed Expense + Profits
Selling Price per unit * No. of Unit = Variable Expenses per unit * No. of Unit + Fixed Expense + Profits
$140*X = $70*X + $31,800 + $6,700
$140X - $70X = $38,500
$70X = $38,500
X = $38,500 / $70
X = 550 Units

Units sales to attain target profits is 550 Units

Answer of Part 2:

Contribution Margin per Unit = Selling price – Variable Expense
Contribution Margin per Unit = $140 - $70
Contribution Margin per unit = $70

Units sold to attain the target profit = (Fixed Expense + Target Profit) / Contribution Margin per Unit
Units sold to attain the target profit = ($31,800 + $9,600) / $70
Units sold to attain the target profit = $41,400 / $70
Units sold to attain the target profit = 591 units

Dollars sales to attain target profit is 591 units

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.