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 15,000 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 $79.000 per month?
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 15,000 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 $79.000 per month?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 16E
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Exercise 2-17 (Algo) Break-Even and Target Profit Analysis [LO2-4, LO2-5, LO2-6]
Outback Outfitters 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 $162,000 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 15,000 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 $79.000
per month?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Break-even point in unit sales
Break-even point in dollar sales
Required 4
What is the break-even point in unit sales and in dollar sales?
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1a88f93e-9dfb-4d45-837c-60cfbeefd36f%2Fec807efe-058e-4ed3-8689-30357eeb1991%2Fceg45qg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ces
Exercise 2-17 (Algo) Break-Even and Target Profit Analysis [LO2-4, LO2-5, LO2-6]
Outback Outfitters 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 $162,000 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 15,000 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 $79.000
per month?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Break-even point in unit sales
Break-even point in dollar sales
Required 4
What is the break-even point in unit sales and in dollar sales?
Required 2 >
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