Question

Lindon Company is the exclusive distributor for an automotive product that sells for $34.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $193,800 per year. The company plans to sell 21,600 units this year.

4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.40 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 $91,800?

My main question is how to get the dollar sales for target profit of $91,800?

Answer 1

Formula used

1. Contribution margin = Sales - Variable cost

2.

3. Variable cost = Sales - Contribution margin

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