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Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, is sold for 50 per unit. Variable expenses are 32 per
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, is sold for 50 per unit. Variable expenses are 32 per stove, and fixed expenses associated with the stove totals 108,000 per month. Required: 1. Compute the break-even point in unit sales and in Euro sales. 2. If the variable expenses per stove increase as a percentage of the selling price, will this then result in a higher or a lower break-even point? Why (assume that the fixed expenses remain unchanged)? 3. At present, the company is selling 8,000 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 income statements; 1. one under present operating conditions, and 2. one, as operations would appear after the proposed changes. Show both total and per unit data on your statements. 4. Referring 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 35,000 per month
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