Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Outback Outfitters manufactures and sells recreational equipment. One of the company's products, a small camp stove, sells for 250 per unit. Variable expenses are 150
Outback Outfitters manufactures and sells recreational equipment. One of the company's products, a small camp stove, sells for 250 per unit. Variable expenses are 150 per stove, and fixed expenses associated with the stove total 800,000 per month. |
Required: | ||
1. | Compute the break-even point in number of stoves. (Round your answer to the nearest whole number.) | |
| ||
Compute the break-even point in total sales pounds. (Round your answer to the nearest whole number.) | ||
| ||
2. | If the variable expenses per stove increase as a percentage of the selling price, it will result in a higher break-even point. (Assume that the fixed expenses remain unchanged.) |
multiple choice
| |
3. | At present, the company is selling 10,000 stoves per month. The sales manager is convinced that a 10 per cent reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution statements of profit or loss, one under present operating conditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. (Round your answers to the nearest whole number.) |
4. | At present, the company is selling 10,000 stoves per month. The sales manager is convinced that a 10 per cent reduction in the selling price would result in a 25% increase in monthly sales of stoves. How many stoves would have to be sold at the new selling price to yield a minimum profit of 175,000 per month? (Do not round intermediate calculations. Round 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