Lindon Company is the exclusive distributor for an automotive product that sells for $33.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $198,990 per year. The company plans to sell 9,200 units this year. Required:
1. What are the variable expenses per unit? (Round your answer to 2 decimal places.)
Variable expense _________ 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 $49,500?
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 expenses by $3.30 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 units ___________
Break even point in dollar sales ______
b. What amount of unit sales and dollar sales is required to earn an annual profit of $49,500?
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 expenses by $3.30 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 _____________