Outback Outfitters sells recreational equipment. One of thecompany’s products, a small camp stove, sells for $120 per unit.Variable expenses are $84 per stove, and fixed expenses associatedwith the stove total $158,400 per month. Required: 1. What is thebreak-even point in unit sales and in dollar sales? 2. If thevariable expenses per stove increase as a percentage of the sellingprice, 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 13,000 stoves per month. The sales manageris convinced that a 10% reduction in the selling price would resultin a 25% increase in monthly sales of stoves. Prepare twocontribution format income statements, one under present operatingconditions, and one as operations would appear after the proposedchanges. 4. Refer to the data in Required 3. How many stoves wouldhave to be sold at the new selling price to attain a target profitof $71,000 per month?
