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Question(s) / Instruction(s):

Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. The company plans to sell 16,000 units this year.

Requirement 1:

What are the variable expenses per unit?

Requirement 2:

Use the equation method for the following:

(a)          What is the break-even point in units and sales dollars?

(b)          What sales level in units and in sales dollars is required to earn an annual profit of $60,000?

(c)           Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the company's new break-even point in units and sales dollars?                               

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