Question

Lin Corporation has a single product whose selling price is $134 per unit and whose variable expense is $67 per unit. The company’s monthly fixed expense is $31,750. Required: 1. Calculate the unit sales needed to attain a target profit of $8,450. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,700.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Fixed cost= $31,750

Unitary contribution margin= 134 - 67= $67

To calculate the number of units to be sold, we need to use the following formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Desired profit= $8,450

Break-even point in units= (31,750 + 8,450) / 67

Break-even point in units= 600

Now, the desired profit is $9,700; we need to use the following formula:

Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio

Break-even point (dollars)= (31,750 + 9,700) / (67/134)

Break-even point (dollars)= 41,450 / 0.5

Break-even point (dollars)= $82,900