Question

Lin Corporation has a single product whose selling price is $140 per unit and whose variable expense is $70 per unit. The company’s monthly fixed expense is $31,900.

Required:

1. Calculate the unit sales needed to attain a target profit of $6,250.

2. Calculate the dollar sales needed to attain a target profit of $9,400. (Round your answer to the nearest whole number.)

Answer 1

Ans-1- The units sales to earn profit of $6,250:-

X= (Fixed cost+ Profit) / (Selling Price -Variable Cost)

X= ($31,900+$6,250)/ ($140-$70)

X=$38,150/ $70

X= 545 units

2- The dollar sales to earn profit of $9,400:-

Contribution =Selling Price- Variable Price

=$140-$70

=$70 per unit.

Dollars sales= Fixed cost +Earned Profit/ Contribution per unit *Selling price

=($31,900+$9,400)/ $70 *$140

=$41,300/$70 *$140

=590 units *$140

=$82,600

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