Question

Lin Corporation has a single product whose selling price is $130 per unit and whose variable...

Lin Corporation has a single product whose selling price is $130 per unit and whose variable expense is $65 per unit. The company’s monthly fixed expense is $32,550.

Required:

1. Calculate the unit sales needed to attain a target profit of $3,850.

2. Calculate the dollar sales needed to attain a target profit of $8,100. (Round your answer to the nearest whole number.)

Homework Answers

Answer #1
  • Working

A

Selling Price

$130

per unit

B

Variable Expenses

$65

per unit

C = A - B

Contribution margin

$65

per unit

D =(C/A) x 100

Contribution margin ratio

50%

  • Requirement 1

A

Total Fixed expenses

$32,550

B

Target Profits

$3,850

C = A+B

Total Contribution margin required

$36,400

D

Contribution margin per unit

$65

E = C/D

Unit sales needed to attain target profit

560 units = Answer

  • Requirement 2

A

Total Fixed expenses

$32,550

B

Target Profits

$8,100

C = A+B

Total Contribution margin required

$40,650

D

Contribution margin ratio

50%

E = C/D

Dollar sales needed to attain target profit

$81,300 = Answer

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