Question

Lin Corporation has a single product whose selling price is $130 per unit and whose variable expense is $65 per unit. The company’s monthly fixed expense is $32,150. Required: 1. Calculate the unit sales needed to attain a target profit of $2,300. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $8,900. (Round your intermediate calculations to the nearest whole number.)

Answer 1

1.- selling 530 units will achieve 2,300 operating profit

2.- sales for $82,100 will achieve 8,900 operating profit

Step-by-step explanation:

sale price 130

variable 65

contribution margin 65

`(Fixed\:Cost + Target \: Profit )/(Contribution \:Margin) = Units\: to\: Profit`

(32150 + 2,300) /65 = 530 units

`(Fixed\:Cost)/(Contribution \:Margin \:Ratio) = Sales\: To\: Profit`

`(Contribution \: Margin)/(Sales \: Revenue) = Contribution \: Margin \: Ratio`

65/130 = 0.5

(32,150 + 8,900) / 0.5 = 82,100