# 4. Refer to the data in (3) above. How many stoves would have to be sold...

###### Question:

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 $79,000 per month? (Round your answer to the nearest whole number.) Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for$100 per unit. Variable expenses are $70 per stove, and fixed expenses associated with the stove total$144,000 per month. Required: 1. Compute the company's break-even point in unit sales and in dollar sales. Break-Even Point Number of stoves Total sales dollars 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.) O Higher break-even point O Lower break-even point 3. At present, the company is selling 17,000 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.

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