Lin Corporation has a single product whose selling price is

Lin Corporation has a single product whose selling price is $136 per unit and whose variable expense is $68 per unit. The company\'s monthly fixed expense is $31,650 Required: 1. Calculate the unit sales needed to attain a target profit of $5,750 2. Calculate the dollar sales needed to attain a target profit of $9,900. (Round your answer to the nearest whole number.) 1. Units sales to attain target profit 2 Dollar sales to a

Solution

Ans.(1) Sales (in units) : Profit = Units x Cont. Mar. - Fixed Cost $5,750 = Units x 68 - $31,650 ($5,750 + $31,650) / 68 = Units Units = $37,400 / 68 = 550 Ans.(2) Sales (in dollars) : Sales in dollars = (Fixed cost + Targeted Income) / Cont. Margin Ratio = ($31,650 + $9,900) / 50% = $41,550 / 50% = $   83,100 Working Note: Cont. Margin Ratio = Contr. Margin / Sale Price = $136 - $68 / $136 = 0.5 = 50%