Lindon Company Is the exclusive distributor for an automotive product that sells for $28.00 per unit and has a CM ratio of30%. The company's fixed expenses are $147,000 per year. The company plans to sell 19,500 units this year.Required:1. What are the varlable expenses per unit? (Round your "per unit" answer to 2 decimal places.)2 What Is the break-even polnt In unit sales and In dollar sales?3. What amount of unit sales and dollar sales is requlred to attaln a target profit of $63.000 per year?4. Assume that by using a more efficlent shipper, the company is able to reduce Its varlable expenses by $280 per unit. WhatIs the company's new break-even polnt In unit sales and in dollar sales? What dollar sales is required to attaln a target profit of$63,000?1. Variable expense per unit2. Break-even point in units2. Break-even point in dollar sales3. Unit sales needed to attain target profit3. Dollar sales needed to attain target profit4. New break-even point in unit sales4. New break-even point in dollar sales4. Dollar sales needed to attain target profit Due to erratic sales of Its sole product--a high-capacity battery for laptop computers-PEM, Incorporated, has beenexperlencing financial difficulty for some time. The company's contribution format Income statement for the most recentmonth Is glven below:Sales (13,280 units x $28 per unit)Variable expensesContribution marginFixed expenses$ 264,000132,000132,000147,880Net operating loss$ (15,000)Required:1. Compute the company's CM ratio and Its break-even polnt in unit sales and dollar sales.2 The president believes that a $6.100 Increase In the monthly advertising budget, combined with an Intensified effort bythe sales staff, will Increase unit sales and the total sales by $81,000 per month. If the president Is right, what will be theIncrease (decrease) In the company's monthly net operating Income?3. Refer to the original data. The sales manager is convinced that a 10% reduction In the selling price, combined with anIncrease of $33,000 in the monthly advertising budget, will double unit sales. If the sales manager Is right, what will be therevised net operating Income (loss)?4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer batterywould grow sales. The new package would Increase packaging costs by $0.50 per unit. Assuming no other changes, howmany units would have to be sold each month to attaln a target profit of $4,700?5. Refer to the orlginal data. By automating. the company could reduce varlable expenses by $3 per unit. However, fixedexpenses would Increase by $54.000 each month.a. Compute the new CM ratio and the new break-even polnt in unit sales and dollar sales.b. Assume that the company expects to sell 20,800 units next month. Prepare two contribution format incomestatements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unitand percentage basis, as well as In total, for each alternative.)c. Would you recommend that the company automate Its operations (Assuming that the company expects to sell 20,800units)?Complete this question by entering your answers in the tabs below.Req 1Req 2Req 3Req 4Req 5AReq 5BReq 5CRefer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixedexpenses would increase by $54,000 each month. Would you recommend that the company automate its operations(Assuming that the company expects to sell 20,800 units)?OYesONo

Cost volume profit analysis is the technique used by the management for decision-making. The methods…

Lindon Company Is the exclusive distributor for an automotive product that sells for $28.00 per unlt and has a CM ratio of 30%. The company's fixed expenses are $147,000 per year. The company plans to sell 19.500 units this year. Required: 1. What are the varlable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2 What Is the break-even polnt In unit sales and in dollar sales? 3. What amount of unit sales and dollar sales Is required to attaln a target profit of $63.000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce Its varlable expenses by $280 per unlt. What Isthe company's new break-even polnt In unit sales and In dollar sales? What dollar sales is required to attaln a target profit of $63.000? 1. Variable expense per unit 2. Break-even point in units 2. Break-even point in dollar sales 3. Unit sales needed to attain target profit 3. Dollar sales needed to attain target profit

Lindon Company Is the exclusive distributor for an automotive product that sells for $28.00 per unlt and has a CM ratio of 30%. The company's fixed expenses are $147,000 per year. The company plans to sell 19.500 units this year. Required: 1. What are the varlable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2 What Is the break-even polnt In unit sales and in dollar sales? 3. What amount of unit sales and dollar sales Is required to attaln a target profit of $63.000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce Its varlable expenses by $280 per unlt. What Isthe company's new break-even polnt In unit sales and In dollar sales? What dollar sales is required to attaln a target profit of $63.000? 1. Variable expense per unit 2. Break-even point in units 2. Break-even point in dollar sales 3. Unit sales needed to attain target profit 3. Dollar sales needed to attain target profit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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