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What are the variable expenses per unit

Question:

Lindon Company is the exclusive distributor for an automotive product that sells for $48.00 per unit and has a CM ratio of 31%. The companys fixed expenses are $252,960 per year. The company plans to sell 18,000 units this year.

Required:

1. What are the variable expenses per unit?

2. Use the equation method:

a. What is the break-even point in unit sales and in dollar sales?

b. What amount of unit sales and dollar sales is required to earn an annual profit of $74,400?

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.00 per unit. What is the companys new break-even point in unit sales and in dollar sales?

3. Repeat above using the formula method.

a. What is the break-even point in unit sales and in dollar sales?

b. What amount of unit sales and dollar sales is required to earn an annual profit of $74,400?

c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.00 per unit. What is the companyAc€?cs new break-even point in unit sales and in dollar sales?

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