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. How many stoves would have to be sold at the new selling price to yield a minimum net operating income of $77,000 per month?
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. How many stoves would have to be sold at the new selling price to yield a minimum net operating income of $77,000 per month?
Related questions
| 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.
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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.) | ||||
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| 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.) |
