Outback Outfitters sells recreational equipment. One of the company’s products, a small camp stove, sells for $140 per u

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Outback Outfitters sells recreational equipment. One of the
company’s products, a small camp stove, sells for $140 per unit.
Variable expenses are $98 per stove, and fixed expenses associated
with the stove total $189,000 per month.
Required:
1. What is the break-even point in unit sales and in dollar
sales?
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.)
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 sales of stoves.
Prepare two contribution format income statements, one under
present operating conditions, and one as operations would appear
after the proposed changes.
4. 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
$78,000 per month?