Outback Outfitters sells recreational equipment. One of the companys products, a small camp stove, sells for $140 per unit. Variable expenses are $98 per stove, and fixed expenses associated with the stove total $201,600 per month.

At present, the company is selling 13,000 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.

Outback Outfitters
Contribution Income Statement	Stoves - Present		Stoves - Proposed
	13,000
	Total	Per unit	Total	Per unit
Sales
Variable expenses
Contribution margin	0	$0	0	$0
Fixed expenses	201,600		201,600
Net operating income	$(201,600)		$(201,600)