Question

Linden Company manufactures automotive parts that sell for $40 per unit and has a CM Ratio...

  1. Linden Company manufactures automotive parts that sell for $40 per unit and has a CM Ratio of 30%. Linden’s fixed costs are $180,000 per year. The company plans to sell 16,000 units this year.

Required:

  1. What is the variable cost per unit?
  2. What is the break-even point in unit sales AND in dollar sales?
  3. What amount of unit sales AND dollar sales is required to earn an annual profit of $60,000?
  4. Assume that by using a more efficient shipper, the company is able to reduce variable costs by $4 per unit. What is the company’s new break-even point in unit sales?

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