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Ch 5 Home Work Lindon Company is the exclusive distributor for an automotive product that sells for $15.00 per unit and has a CM ratio of 30%. The
Lindon Company is the exclusive distributor for an automotive product that sells for $15.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $74,250 per year. The company plans to sell 14,000 units this year.
Required:
1.
What are the variable expenses per unit? (Round your answer to 2 decimal places.)
2. Use the equation method:
- What is the break-even point in unit sales and in dollar sales?
- What amount of unit sales and dollar sales is required to earn an annual profit of $22,500?
- Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $1.50 per unit. What is the company’s new break-even point in unit sales and in dollar sales?
3. Repeat (2) above using the formula method.
- What is the break-even point in unit sales and in dollar sales?
b. What amount of unit sales and dollar sales is required to earn an annual profit of $22,500?
c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $1.50 per unit. What is the company’s new break-even point in unit sales and in dollar sales?
