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(Solved): Lindon Company is the exclusive distributor for an automotive product that sells for \( \$ 40 \) pe ...




Lindon Company is the exclusive distributor for an automotive product that sells for \( \$ 40 \) per unit and has a CM ratio
Lindon Company is the exclusive distributor for an automotive product that sells for \( \$ 40 \) per unit and has a CM ratio of \( 30 \% \). The company's fixed expenses are \( \$ 180,000 \) per year. The company plans to sell 16,000 units this year. Required: 1. What are the variable expenses per unit? 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of \( \$ 60,000 \) per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by \( \$ 4 \) per unit. What is the company's new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of \( \$ 60,000 \) ?


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Workings 1. Variable expense = Sales Price* ( 1 - Contribution margin ratio) = 40 * ( 1 - 30%) = $28 2. Break-even point in units and in dollar sales Contribution margin = 40 * 30% = $12 Breakeven sales in un
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