Lin Corporation has a single product whose selling price is $134 and whose varia

Question

Lin Corporation has a single product whose selling price is $134 and whose variable expense is $67 per unit. The company's monthly fixed expense is $32,100 Required: 1. Using the equation method, determine for the unit sales that are required to earn a target profit of $4,750. (Round up your answer to the nearest whole number.) Unit sales 2. Using the formula method, determine for the unit sales that are required to earn a target profit of $9,000. (Round up your answer to the nearest whole number.) Unit sales

Explanation / Answer

1.Sales=Variable expenses+Fixed expenses+Target profits

Let units sold be x

Hence

134x=67x+32100+4750

Hence

x=(32100+4750)/(134-67)=550 units

2.

Contribution margin=Sales-Variable expenses

=(134-67)=$67

Unit sales=(Fixed expenses+Target profit)/Unit contribution margin

(32100+9000)/67=613 units(Approx).

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