Exercise 5-7 Compute the Level of Sales Required to Attain a Target Profit [LO5-
ID: 2540690 • Letter: E
Question
Exercise 5-7 Compute the Level of Sales Required to Attain a Target Profit [LO5-6]
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Lin Corporation has a single product whose selling price is $134 and whose variable expense is $67 per unit. The company’s monthly fixed expense is $32,300.
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Section BreakExercise 5-7 Compute the Level of Sales Required to Attain a Target Profit [LO5-6]
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value:
2.00 points
Required information
Exercise 5-7 Part 1
Using the equation method, determine for the unit sales that are required to earn a target profit of $7,900. (Round up your answer to the nearest whole number.)
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3.
value:
2.00 points
Required information
Exercise 5-7 Part 2
Using the formula method, determine for the unit sales that are required to earn a target profit of $8,600. (Round up your answer to the nearest whole number.)
[The following information applies to the questions displayed below.]
Explanation / Answer
5-7 Part-1 Computation of no. of Unit sales for target Profit of $7900 Let No. of Unit Sold = X Total Contribution $67X Target Profit = Contribution- Fixed expense $7,900 = $67X-$32300 $40,200 = 67X X = $40200/67 = 600 600 Unit Requre to be sold to achieve $7900target Profit 5-7 Part-2 Computation of no. of Unit sales for target Profit of $8600 Let No. of Unit Sold = x Total Contribution $67X Target Profit = Contribution- Fixed expense $8,600 = $67X-$32300 $40,900 = 67X X = $40900/67 = 610 610 ( Round off) Unit Requre to be sold to achieve $8600 target Profit