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.)
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% |
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 |
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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