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Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $81 per unit. The company’s monthly fixed expense is $24,300. Calculate the unit sales needed to attain a target profit of $4,050. (Do not round intermediate calculations.)

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sqdancefan

Answer:

  525 units

Explanation:

You want the number of units sold at $135 each required to cover $81 per unit in variable cost and $24,300 in fixed cost, and produce $4050 in profit.

Contribution margin

The contribution each sale makes is $135 -81 = $54. In order to produce a total of $24,300 +4050 = $28,350 in contribution, the number of units sold must be ...

  n · $54 = $28350

  n = 28350/54 = 525

Sale of 525 units is needed.

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