break even and target profit analysis

EXERCISE4-16 Break-Even and Target Profit Analysis _L04, L05, @L061 Outback Outfitters sells recreational equipment. One ofthe company's _products, asmall camp stove, sells for $50 per unit. Variable expenses are $32 per stove, and fixed expenses associated withtlle stove total $ 108,000 per month. Required: L Compute the company's break-even point in unit sales and in total sales dollars. 2. Ifthe variable expenses per stove increase as a percentage of the selling price, will it result in a higher ora lower break-even point? Why? (Assume that the fixed expenses remain unchanged.) 3. At present, the convany is selling 8,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would _result ina 25% increase in monthly sales of stoves. There would be no change to fixed costs. Using an incremental approach, calculatemleeffect on operating income of this change, (Hint: When determining the increlnental effect on operating income, rememberto also consider the impact of the 10% decline in selling price given the current level ofsales of 8000 stoves per month.) 4. Refer to the datan (3) above. How many stoves would have to be sold at the new selling price to attain a target profit of S35,000 per month? Ignore taxes, 4)