Reveen Products sells camping Equipment. One of the company'sproducts a camping lantern, sells for $ 90 a unit. Variableexpenses are $ 63 per lantern, and fixed expenses associated withthe lantern total $ 135,000. per month.
Required:
A: compute the company's break even point in number of lanternsand in number of lanterns and in total sales dollars.
B: If the variable expenses per lantern increase as a percentageof the selling price, will it result in a higher or lower breakeven point? Why? (Assume that the fixed expenses remainunchanged)
C: At present the company is selling 8,000 per month. The salesmanager is convinced that a 10% reduction in the selling price willresult in a 25% increase in the number of lanterns sold each month.Prepare two contribution income statements, one under presentoperating conditions and one as operations would appear after theproposed changes. Sho both total and per unit data on yourstatements and determine if the proposed changes will be beneficialto the company's net operating income.
D: refer to the data in (c) above. How many lanterns would haveto be sold at the new selling price to yield a minimum netoperating income of $ 72,000 per month?
Please break down step by step and show your work.
Reveen Products sells camping Equipment. One of the company'sproducts a camping lantern, sells for $ 90 a unit. Variableexpenses are $ 63 per lantern, and fixed expenses associated withthe lantern total $ 135,000. per month.
Required:
A: compute the company's break even point in number of lanternsand in number of lanterns and in total sales dollars.
B: If the variable expenses per lantern increase as a percentageof the selling price, will it result in a higher or lower breakeven point? Why? (Assume that the fixed expenses remainunchanged)
C: At present the company is selling 8,000 per month. The salesmanager is convinced that a 10% reduction in the selling price willresult in a 25% increase in the number of lanterns sold each month.Prepare two contribution income statements, one under presentoperating conditions and one as operations would appear after theproposed changes. Sho both total and per unit data on yourstatements and determine if the proposed changes will be beneficialto the company's net operating income.
D: refer to the data in (c) above. How many lanterns would haveto be sold at the new selling price to yield a minimum netoperating income of $ 72,000 per month?
Please break down step by step and show your work.
Related questions
Outback Outfitters sells recreational equipment. One of thecompanyâs products, a small camp stove, sells for $130 per unit.Variable expenses are $91 per stove, and fixed expenses associatedwith the stove total $179,400 per month. |
| Required: | |
| 1. | Compute the companyâs break-even point in unit sales and indollar sales. |
| 2. | If the variable expenses per stove increase as a percentage ofthe selling price, will it result in a higher or a lower break-evenpoint? (Assume that the fixed expenses remain unchanged.) | ||||
|
| 3. | At present, the company is selling 16,000 stoves per month. Thesales manager is convinced that a 10% reduction in the sellingprice would result in a 25% increase in monthly sales of stoves.Prepare two contribution format income statements, one underpresent operating conditions, and one as operations would appearafter the proposed changes. |
| 4. | Refer to the data in (3) above. How many stoves would have to besold at the new selling price to yield a minimum net operatingincome of $74,000 per month? (Round your answer to thenearest whole number.) |
| Outback Outfitters sells recreational equipment. One of the companyâs products, a small camp stove, sells for $120 per unit. Variable expenses are $84 per stove, and fixed expenses associated with the stove total $154,800 per month.
|
