Lindon Company is the exclusive distributor for an automotive product that sells for $41.00 per unit and has a CM ratio of 35%. The company’s fixed expenses are $301,350 per year. The company plans to sell 22,000 units this year.
Required:
1. |
What are the variable expenses per unit? (Round your answer to 2 decimal places.) |
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2. | Use the equation method: |
a. |
What is the break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) |
b. |
What amount of unit sales and dollar sales is required to earn an annual profit of $71,750? (Do not round intermediate calculations.) |
c. |
Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.20 per unit. What is the company’s new break-even point in unit sales and in dollar sales? (Do not round intermediate calculations. Round up break even point answers to the nearest whole number.) |
3. | Repeat (2) above using the formula method. |
a. |
What is the break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) |
b. |
What amount of unit sales and dollar sales is required to earn an annual profit of $71,750? (Do not round intermediate calculations.) |
c. |
Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.20 per unit. What is the company’s new break-even point in unit sales and in dollar sales? (Do not round intermediate calculations. Round up break even point answers to the nearest whole number.) |