# Ch 5 Home Work Lindon Company is the exclusive distributor for an automotive product that sells for \$15.00 per unit and has a CM ratio of 30%. The

Lindon Company is the exclusive distributor for an automotive product that sells for \$15.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are \$74,250 per year. The company plans to sell 14,000 units this year.

Required:

1.

What are the variable expenses per unit? (Round your answer to 2 decimal places.)

2.            Use the equation method:

• What is the break-even point in unit sales and in dollar sales?
• What amount of unit sales and dollar sales is required to earn an annual profit of \$22,500?
• Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by \$1.50 per unit. What is the company’s new break-even point in unit sales and in dollar sales?

3.          Repeat (2) above using the formula method.

• What is the break-even point in unit sales and in dollar sales?

b.    What amount of unit sales and dollar sales is required to earn an annual profit of \$22,500?

c.    Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by \$1.50 per unit. What is the company’s new break-even point in unit sales and in dollar sales?