Question
Outback Outfitters sells recreational equipment. One of the companys products, a small camp stove, sells for $110 per unit. Variable expenses are $77 per stove,
Outback Outfitters sells recreational equipment. One of the companys products, a small camp stove, sells for $110 per unit. Variable expenses are $77 per stove, and fixed expenses associated with the stove total $158,400 per month.
PART A) At present, the company is selling 15,000 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.
|
PART B)
Refer 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 $76,000 per month? (Round up your answer to the nearest whole number.) |
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started