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Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $140 per unit. Variable expenses are $98 per stove,
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $140 per unit. Variable expenses are $98 per stove, and fixed expenses associated with the stove total $180,600 per month At present, the company is selling 17,000 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 Present 17,000 Stoves Proposed Stoves Total Per unit Total Per unit Sales Variable expenses Contribution margin Fixed expenses Net operating income 0 S 0 0 $ 0 $ 0 $ 0
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