90.2K

Verified Solution

Link Copied!

Reveen Products selis camping equipment. One of the company's products, a camp lantern, sells for $100 per unit. Variable expenses are $70 per lantern, and fixed expenses associated with the lantern total $141,000 per month. Required: 1. Compute the company's break-even point in number of lanterns and in total sales dollars. (Omit the "$" sign in your response.) Number of lanterns Total sales dollars 2. If the variable expenses per lantern 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.) 4700 470000 Higher break-even point Lower break-even point 3. At present, the company is selling 10,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% Increase in the number of lanterns sold each month. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. (Input all amounts as positive values except losses which should be indicated by a minus sign.Omit the "S" sign in your response.) Sales VES Present 10,000 lanterns Total Per Unit $1000000 $ 100 1700000 70 Proposed 12500 lanterns Total Per Unit $ 25000 $ Cotton 00000 100 $ 30 $ Share Prev lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution format Income statements, one under present operating conditions, and one as operations would appear after the proposed changes, (Input all amounts as positive values except losses which should be indicated by a minus sign.Omit the "$" sign in your response.) Present 10,000 lanterns Total Per Unit 1000000 $ 700008 YO Proposed c) lanterns Total Per Unit 25000 $ Varables 1 0000 1000 30 4. Refer to the data in 3 above. How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $70,000 per month (Round your answer to the nearest whole number.)

Answer & Explanation Solved by verified expert

See Answer