Question
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $50 per unit. The contribution margin per camp stove
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $50 per unit. The contribution margin per camp stove is 36% while the fixed expenses associated with the stove total $108,000 per month. 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. 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. Show all computations.
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