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XYZ Corp. sells recreational equipment. One of the company's products, a small camp stove, sells...

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Question

Accounting

XYZ Corp. sells recreational equipment. One of the company's products, a small camp stove, sells for $120 per unit. Variable expenses
are $84 per stove, and fixed expenses associated with the stove total $151,200 per month.
Required:
What is the break-even point in unit sales and in dollar sales?
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.)
At present, the company is selling 16,000 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.
Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $73,000
per month?
Complete this question by entering your answers in the tabs below.
Required 1
Required 3
What is the break-even point in unit sales and in dollar sales?
Break-even point in unit sales
Break-even point in dollar sales
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