Qutback Outntters sells recreational equipment. One of the company's products, a small camp stove, sells for $130 per unit varlable. oxpenses are $91 per stove, and fixed expenses associated with the stove total $195.000 per month. Required: 1. What is the break-even point in unit sales and in dollar sales? 2. If the varlable expenses per stove increase as appercentoge of the selling price, will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged) 3. At present, the company is selling 10,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly soles of stoves. Prepare fwo contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. 4. Reler to the data in Required 3. How many stoves would have to be sold at the new seling price to attain a target profa of $79.000 per month? Morton Company's contribution format incomp statement for last month is given below: The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from yoar to year according to general economic conditions. The company has a large amount of unused cepacity and is studying ways ofimproving profits. Required: 1. New equipment has come onto the market that would allow Morton Company to automate a portion of its operations. Variable expenses would be reduced by $9.00 per unit. However, fixed expenses would increase to a total of $810,000 each month. Prepore two contribution format income statements, one showing present operations and one showing how operations would appear if the new equipment is purchased. 2. Refer to the income statements in (i). For the present operations and the proposed new operations, compute (o) the degree of operating leverage, (b) the break-even point in dollar sales, and (c) the margin of safety in dollars and the margin of safety percentage. 3. Refer again to the data in (7). As a manager, what factor would be paramount in your mind in deciding whether to purchase the new equipment? (Assume that enough funds are avallable to make the purchase.) 4. Refer to the original data. Rather than purchase new equipment, the marketing manager argues that the company's marketing strategy should be changed. Rather than pay sales commissions, which are currently included in variable expenses, the compony would pay salespersons fixed salaries and would invest heavily in advertising. The marketing manager claims this new approach would increase unit sales by 30% without any change in selling price; the company's new monthly fixed expenses would be $574.500; and its net operoting income would increase by 20%. Compute the company's break-even point in dollar sales under the new marketing strategy