Question

Lin Corporation has a single product whose selling price is $140 per unit and whose variable expense is $70 per unit. The company's monthly fixed expense is $31,900. Required: 1. Calculate the unit sales needed to attain a target profit of $6,250. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,400. (Round your intermediate calculations to the nearest whole number.) units 1. Units sales to attain target profit 2. Dollar sales to attain target profit

Answer 1

Answer-1)-Unit sales needed to attain target profit =545 units.

Explanation- (Fixed costs+ Target profit)/Contribution margin per unit

= ($31900+$6250)/($140 per unit-$70 per unit)

= $38150/$70 per unit

= 545 units

2)- Dollar sales needed to attain target profit =$82600.

Explanation- (Fixed costs+ Target profit)/Contribution margin ratio

= ($31900+$9400)/50%

= $41300/50%

= $82600

Where- Contribution margin ratio= (Contribution margin per unit/Selling price per unit)*100

= ($70 per unit/$140 per unit)*100

= 50%