60.1K

Verified Solution

Link Copied!

At present, the company is selling 20,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. Complete this question by entering your answers in the tabs below. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $78,000 per month? Note: Round up your final answer to the nearest unit. Complete this question by entering your answers in the tabs below. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.) The increase in variable expenses per stove will result in a Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, selis for $150 per unit. Variable expenses are $105 per stove, and fixed expenses associated with the stove total $220,500 per month. Required: 1. What is the break-even point in unit sales and in dollar sales? 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.) 3. At present, the company is selling 20,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. 4. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $78,000 per month? Complete this question by entering your answers in the tabs below. What is the break-even point in unit sales and in dollar sales

Answer & Explanation Solved by verified expert

See Answer