Question

Lin Corporation has a single product whose selling price is $120 per unit and whose variable expense is $80 per unit. The company’s monthly fixed expense is $50,000.

Required:

1. Calculate the unit sales needed to attain a target profit of $10,000. (Do not round intermediate calculations.)

2. Calculate the dollar sales needed to attain a target profit of $15,000. (Round your intermediate calculations to the nearest whole number.)

Answer 1

Selling Price	120
Less: Variable Cost	80
Contribution MArgin ( 120-80)	40
Contribution Margin Ration = 40/120	33.33%
Fixed Cost	50,000

Question :1

Units Sales Needed to Attain the Target profit of $10,000

Units Needed = (fixed Cost + Target Profit) / CM Per unit

= (50,000+10,000) / 40 = 1500 Units (Answer)

Question :2

Dollar sales need to Attain the Profit of $15000

Dollar Sales Needed = (fixed Cost + Target Profit) / CM Ratio

   = (50,000+15,000) / 0.33333 = $ 195,0000 Dollars ( Answer)