What are the answers to both pictures? Lindon Company is the exclusive distribut

Question

What are the answers to both pictures? Lindon Company is the exclusive distributor for an automotive product that sells for $27 00 per unit and has a CM ratio of 30% The company's fixed expenses are $153.090 per year. The company plans to sel 10,800 units this year Required: 1 what are he variable expenses per unound your answer to 2 decimal places.) per unit 2 Use the equation method a What is the break-even point in unit sales and in dollar sales? Break-even point in unit sales Break-even point in dollar sales b. What amount of unit sales and dollar sales is required to earn an annual profit of $40,500? Sales level in units Sales level in dollars c Assume that by using a more efficient shipper, the company is able to reduce its variable eoxpenses by $2.70 per unit. What is the company's new break-even point in unit sales and in dollar sales? New break-even point in unit sales New break-even point in dollar sales 3. Repeat (2) above using the formula method a What is the break-even point in unit sales and in dollar sales? Break-even point in unit sales Break-even point in dollar sales

Explanation / Answer

Question 1). Solution :- Variable expenses per unit = 27 * (1 - 0.30)

= 27 * 0.70

= $ 18.90

Conclusion :- Variable expenses per unit = $ 18.90

Question 2). a). Solution :- At break even point, Profit = 0.

Profit = Contribution margin per unit * Number of units sold - Fixed expenses.

0 = (27 * 30 %) * Number of units sold - 153090

153090 = 8.10 * Number of units sold

Number of units sold = 153090 / 8.10

Number of units sold = 18900 Units.

Conclusion :- Break even point (in unit sales) = 18900 Units.

Question 2). b). Solution :- Break even point (in sales dollar) = 18900 * 27 = $ 510300.

Question 2). c). Solution :- New contribution margin per unit = 27 * (1 - 0.30) - 2.70

= 27 * 0.70 - 2.70

= 18.90 - 2.70

= $ 16.20

At break even point, Profit = 0.

Profit = New contribution margin per unit * Number of units sold - Fixed expenses

0 = 16.20 * Number of units sold - 153090

153090 = 16.20 * Number of units sold

Number of units sold = 153090 / 16.20

Number of units sold = 9450 Units.

Conclusion :- New break even point (in unit sales) = 9450 Units.

New break even point (in sales dollar) = 9450 * 27 = $ 255150.

Question 3). a). Solution :- Break even point (in unit sales) = Fixed cost / Contribution per unit.

= 153090 / (27 * 30 %)

= 153090 / 8.10

= 18900 units.

Break even point (in sales dollar) = Fixed costs / Contribution margin ratio

= 153090 / 0.30

= $ 510300.

Conclusion :-

Break even point (in unit sales) 18900 units. Break even point (in sales dollar) $ 510300.

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