Outback Outfitters sells recreational equipment. One of the company’s products, a small camp stove, sells for $130 per unit. Variable expenses are $91 per stove, and fixed expenses associated with the stove total $163,800 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 un changed.)

3. At present, the company is selling 18,000 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$70,000 per month?

What is the break-even point in unit sales and in dollar sales?

What is the break-even point in unit sales and in dollar sales?

Break-even point in unit sales
Break-even point in dollarsales

If the variable expenses per stove increase as a percentage ofthe selling price, will it result in a higher or a lower break-evenpoint? (Assume that the fixed expenses remain unchanged.)

Which One?
	Higher break-even point Lower break-even point

At present, the company is selling 18,000 stoves per month. Thesales manager is convinced that a 10% reduction in the sellingprice would result in a 25% increase in monthly sales of stoves.Prepare two contribution format income statements, one underpresent operating conditions, and one as operations would appearafter the proposed changes.

Outback Outfitters
Contribution Income Statement	Stoves - Present		Stoves - Proposed
	18,000
	Total	Per unit	Total	Per unit

Refer to the data in Required 3. How many stoves would have tobe sold at the new selling price to attain a target profit of$70,000 per month? (Round up your final answer to the nearestunit.)

Unit sales needed to attainthe target profit