Question

Lin Corporation has a single product whose selling price is $136 per unit and whose variable expense is $68 per unit. The company’s monthly fixed expense is $32,000. Required: 1. Calculate the unit sales needed to attain a target profit of $7,100. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,200. (Round your intermediate calculations to the nearest whole number.)

Answer 1

1.Sales=Variable expenses+Fixed expenses+Profits

Take the values given in question

$136Q=$68Q+$32000+$7100

$136Q- $68Q= $32000+$7100

$68Q=$39100

Q=$39100/$68

Q=575 units.

So,the unit sales needed to attain a target profit of $7100 is 575 units.

2.Sales= variable expenses+Fixed expenses+profits

As per question target profit is 9200

So,

As per formula ,put the values given in question

$136Q=$68Q+$32000+$9200

$68Q=$41200

Q=$41200/$68

Q=605.88units or 606units.

Company need to sell 606units to earn a target profit of $9200 .So in order to calculate sales in dollars we can do the following

Sales in dollar =number of units to be sold ×sales price

=606units×$136

Sales in dollars =$82416

(Note : calculation is done according to equation method)

2.in 2nd question if you are not approx the number then unit will be 605.88 units and sales in dollars will be $82280 approx.