Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $54 per unit. The company’s monthly fixed expense is $40,280.

Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $54 per unit. The company’s monthly fixed expense is $40,280.

Required:

1. Calculate the unit sales needed to attain a target profit of $6,700. (Do not round intermediate calculations.)

2. Calculate the dollar sales needed to attain a target profit of $9,100. (Round your intermediate calculations to the nearest whole

Explanation

1.

The equation method yields the required unit sales, Q, as follows:

Profit	=	Unit CM × Q − Fixed expenses
$6,700	=	($135 − $54) × Q − $40,280
$6,700	=	($81) × Q − $40,280
$81 × Q	=	$6,700 + $40,280
Q	=	$46,980 ÷ $81
Q	=	580 units

2.

One approach to solving this requirement is to compute the unit sales required to attain the target profit and then multiply this quantity by the selling price per unit:

Profit	=	Unit CM × Q − Fixed expenses
$9,100	=	($135 − $54) × Q − $40,280
$9,100	=	($81) × Q − $40,280
$81 × Q	=	$9,100 + $40,280
Q	=	$49,380 ÷ $81
Q	=	610 units

Unit sales to attain the target profit (a)		610
Selling price per unit (b)	$	135
Dollar sales to attain target profit (a) × (b)	$	82,350

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