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Outback Outfitters sells recreational equipment. One of the companys products, a small camp stove, sells for $120 per unit. Variable expenses are $84 per stove, and fixed expenses associated with the stove total $147,600 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 19,000 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?

t present, the company is selling 19,000 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.

	requirement 3
	Outback Outfitters Contribution Income Statement Stoves - Present Stoves - Proposed 19,000 Total Per unit Total Per unit Sales $120 $108 Variable expenses 84 84 Contribution margin 0 $36 0 $24 Fixed expenses 147,600 147,600 Net operating income $(147,600) $(147,600)

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? (Round up your final answer to the nearest unit.)

	Requirement 4
	Unit sales needed to attain the target profit:_______

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