Lin Corporation has a single product whose selling price is $135 and whose variable expense is $81 per unit. The company’s monthly fixed expense is $23,580. Using the equation method, determine for the unit sales that are required to earn a target profit of $4,500. Using the formula method, determine for the unit sales that are required to earn a target profit of $9,500. (Round up your answer to the nearest whole number.)
Answer:
sales that are required to earn a target profit of $9,500.= 613 Units
Working Notes for the above answer is as under
Unit CM
= Selling price per unit − Variable expenses per unit
= $135 per unit − $81per unit
= $54 per unit
Unit sales to attain a target profit
= (Target profit + Fixed expenses) ÷ Unit CM
= ($9500+23580) ÷ $54 per unit
=613 units
