Orillia Equipment sells riding lawn mowers. The average price for a lawn mower is $16,000. Orillia purchases these mowers from the manufacturers at an average cost of $12,200. Orillia’s monthly fixed costs are $28,000 in rent, $45,000 in salaries, $5,600 in advertising and promotion, and $1,200 in other operating expenses. It has a corporate tax rate of 25%.
REQUIRED
1. How many mowers must Orillia Equipment sell each month to break even?
2. How many mowers must be sold each month if Orillia Equipment has a target net income of $42,750?