Question
Can I get help with this quesiton. Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Outback Outfitters sells recreational equipment. One of the
Can I get help with this quesiton.
Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6]
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 $169,200 per month. |
Required: | |
1. | Compute the companys 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 17,000 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 (3) above. How many stoves would have to be sold at the new selling price to yield a minimum net operating income of $79,000 per month? (Round up your answer to the nearest whole number.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started