Saved ework Lindon Company is the exclusive distributor for an automotive produc

Question

Saved ework Lindon Company is the exclusive distributor for an automotive product that sells for $48.00 per unit and has a C company's fixed expenses are $324,000 per year. The company plans to sell 26,500 units this year. Required: 1 What are the variable expenses per unit? 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 $180,000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4.80 per unit. What is the company's new break-even point in unit sales and in dollar sales? 1. Variable expense per unit 2. Break-even point in units Break-even point in dollar sales 3. Unit sales needed to attain target profit Dollar sales needed to attain target proft 4 New break-even point in unit sales New break-even point in dollar sales Doller sales needed to attain target profit

Explanation / Answer

1. Variable exp per unit= $ 33.6

(Cont- Margin Ratio=.3 or 30%,

Cont-Margin Ratio= Salesp.u.-Var Exp.p.u/salesp.u

.3=48- Var.Exp.p.u/48

So, Var Exp.pu. = 33.6

2. BEP IN UNITS= FIXED COST/(S.P p.u- VAR COST p.u.)

=324000/14.4

=22500 units

BEP IN DOLLARS= BEP IN UNITS * S.P. p.u

= 22500*48

=$1080000

3. Unit Sales needed to attain profit of $180000

=Desired Profit/ Cont p.u.+ BEP UNITS

=180000/(48-33.6) + 22500

=35000 UNITS

DOLLAR SALES REQ= 35000*48

=$1680000

4. NEW BEP IN UNITS= FIXED COST/(SP. p.u. - Var Cost p.u)

=324000/(48-28.8)

=16875 units

NEW BEP IN $= 16875*48

=$810000

DOLLAR SALES REQ. TO ATTAIN PROFIT OF $180000

=180000/(48-28.8) + 16875 UNITS

=26250 UNITS

$ SALES= 26250*48

=$1260000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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