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24 September, 21:20

Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $54 per unit. The company's monthly fixed expense is $40,400.

Required:

1. Calculate the unit sales needed to attain a target profit of $4,150.

2. Calculate the dollar sales needed to attain a target profit of $8,800. (Round your answer to the nearest whole number.)

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Answers (1)
  1. 24 September, 21:25
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    When target profit is $4150 sales unit is 550

    When target profit is $8800 sales unit is 607

    Explanation

    Unit sales to attain a target profit = fixed expenses + target profit/contribution per unit

    Fixed expenses is $40,400

    target profit of $4150

    contribution per unit = selling price - variable cost

    selling price is $135

    variable cost is $54

    contribution per unit=$135-$54

    =$81

    Unit sales at target profit of $4150 = ($40,400+$4150) / $81

    =550 units

    Unit sales at target profit of $8,800 = ($40,400+$8,800) / $81

    =607 units
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