EXERCISE 2-14 Break-Even Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. The company plans to sell 16,000 units this year. Required: 1. What are the variable expenses per unit? 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $60,000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable danc expenses by $4 per unit. What is the company's new break-even point in unit sales and in dol- lar sales? What dollar sales is required to attain a target profit of $60,000?
EXERCISE 2-14 Break-Even Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. The company plans to sell 16,000 units this year. Required: 1. What are the variable expenses per unit? 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $60,000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable danc expenses by $4 per unit. What is the company's new break-even point in unit sales and in dol- lar sales? What dollar sales is required to attain a target profit of $60,000?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:EXERCISE 2-14 Break-Even and Target Profit Analysis LO2-3, LO2-4, LO2-5, LO2-6
Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit
and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. The company
plans to sell 16,000 units this year. od oste esas blow
Required:
What are the variable expenses per unit?
What is the break-even point in unit sales and in dollar sales?
What amount of unit sales and dollar sales is required to attain a target profit of $60,000 per
year?
1.
2.
3.
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4.
Assume that by using a more efficient shipper, the company is able to reduce its variable
dancexpenses by $4 per unit. What is the company's new break-even point in unit sales and in dol-
Foglar sales? What dollar sales is required to attain a target profit of $60,000?
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