question 1

Outback Outfitters sells recreational equipment. One of the companys products, a small camp stove, sells for $90 per unit. Variable expenses are $63 per stove, and fixed expenses associated with the stove total $132,300 per month.

Required:

1. Compute the companys break-even point in unit sales and in dollar sales.

2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.)

Higher break-even point

Lower break-even point

3. At present, the company is selling 20,000 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.

4. 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 $73,000 per month? (Round your answer to the nearest whole number.)

question 2

Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, and then compute the missing items.)

a. Assume that only one product is being sold in each of the four following case situations: (Do not round intermediate calculations)

case 1 case 2 _____ case 3 case 4

units sold 9000 19800 5600

sales 315000 345800 184000

variable exp 117000 178200

fixed exp 93000 171000 84000

net op income loss 55100 188200 0

cm per unit 17 14

sales 449000 204000 309000

varible exp 140760 95790

fixed exp 61000 473000

net op in (loss) 54130 91000 (13790)

cm ratio percent 37% 80%

Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $90 per unit. Variable expenses are $63 per stove, and fxed expenses associated with the stove total $132,300 per month. Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, and then compute the missing items Required: 1. Compute the company's break-even point in unit sales and in dollar sales Required: a. Assume that only one product is being sold in each of the four following case situations: (Do not round intermediate calculations) 2. If the variable expenses per stove increase as a percentage of the selling price, wil it result in a higher or a lower break-even point? (Assume that the fixed expenses de remain unchanged.) b. Assume that more than one product is being sold in each of the four following case situations: (Do not round intermediate calculations) 3. At present, the company is selling 20,000 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 4. Refer to the data in (3) above. How many stoves would have to be sold at the new icty: 1 Easy iOcv 3- selling price to yield a minimum net operating income of S73,000 per month? (Round your answer to the nearest whole number.)