Question

Lin Corporation has a single product whose selling price is $120 per unit and whose variable expense is $80 per unit. The company’s monthly fixed expense is $50,000.

Required:

1. Calculate the unit sales needed to attain a target profit of $10,000.

2. Calculate the dollar sales needed to attain a target profit of $15,000

Answer 1

F. Contribution Margin Ratio =Contribution Margin/Selling Price =$40 / $120 33.33% AB 1 Per Unit 2 Selling Price $ 120 3 Less: Variable Expense $ 80 4. Contribution Margin $ 40 5 Fixed Expenses $ 50,000 Unit Sales to attain a target profit of $10,000 =(Fixed Expenses + Target Profit) / Contribution Margin per unit =($50,000 + $10,000 / $40 1,500 Unit Sales 6 7 8 Unit Sales to attain a target profit of $10,000 =(Fixed Expenses + Target Profit) / Contribution Margin Ratio =($50,000 + $15,000) / 33.33% 195,019.50 Dollar Sales 10 11

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