5-14

4. variable expenses increase by 60 cents by 10%? EXERCISE 5-14 Break-Even and Target Profit Analysis L05-3, LO5-4, LO5-5, LO5-6 per unit Lindon Company is the exclusive distributor for an automotive product that sells for $40 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. Required: 1. What are the variable expenses per unit? 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $60,000 per year? 4. 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 unit sales and in dollar sales? What dollar sales is required to attain a target profit of $60,000? EXERCISE 5-15 Operating Leverage L05-1, LO5-8 Magic Realm, Inc., has developed a new fantasy board game. The company sold 15,000 games last year at a selling price of $20 per game. Fixed expenses associated with the game total $182,000 and variable expenses are $6 per game. Production of the game is entrusted to a printing to this contractor