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goldenfox [79]
3 years ago
11

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

iable expenses are $98 per stove, and fixed expenses associated with the stove total $176,400 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 16,000 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 $80,000 per month?
Business
1 answer:
JulsSmile [24]3 years ago
7 0

Answer:

Instructions are listed below

Explanation:

Giving the following information:

selling price= $140 per unit.

Variable expenses are $98 per stove

Fixed expenses associated with the stove total of $176,400 per month.

1) Break-even point (units)= fixed cost/ contribution margin

Break-even point (units)= 176400/(140-98)= 4200 units

Break-even point (dollars)= fixed costs/ contribution margin rate

Break-even point= 176400/[(140-98)/140]= $588,000

2) Let's assume that the selling and variable costs increase by 10%

Break-even point (units)= 176400/(154- 107.8)= 3818 units

As the denominator increases, fewer units are necessary to cover fixed costs.

3) Normal condition:

Sales= 140*16000= 2,240,000

Variable costs= 98*16000= 1,568,000

Gross income= 672,000

Fixed costs= 176400

Net operating income= 495,600

New condition:

Price= $126; Sales= 20,000 units

Sales=20000*126= 2,520,000

Variable costs= 98*20000= 1,960,000

Gross profit= 560,000

Fixed costs= 176400

Net operating income= 383,600

4) Profit= 80,000

Break-even point (units)= (fixed costs + profit)/contribution margin

Break-even point (units)= (176400 + 80000)/(126 - 98)= 9157 units

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Answer:

$300

Explanation:

Data provided in the question

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We can find out the stockholder equity by deducting the total liabilities from the total assets

7 0
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a bookstore sells 617 books on monday, 498 books on tuesday, and 563 books on wednesday. on which two days did the bookstore sel
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Given that news organizations frequently call for more transparency from the government and organizations they cover, critics fi
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Answer:

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3 years ago
Find the present value of the following stream of cash flows assuming that the firms opportuiny costs is 9 percent. 1-5 years 10
Yanka [14]

Answer:

   ∑( Cash flow × PVF) = 79,347

Explanation:

Given:

Opportunity cost = 9%

Cash flow for 1-5 years = 10,000

Cash flow for 6-10 years = 16,000

Now,

Present value factor (PVF) = \frac{\textup{1}}{\textup{(1 + 0.09)^n}}

here, n is the year

For year 1 to  5

Year             Cash flow             PVF             Cash flow × PVF

1                     10000             0.9174             9174

2                     10000             0.8417             8417

3                      10000             0.7722             7722

4                      10000             0.7084             7084

5                      10000             0.6499             6499

for years 6 to 10

Year             Cash flow             PVF             Cash flow × PVF

6                      16000              0.5963             9540.8

7                      16000              0.547             8752

8                      16000              0.5019             8030.4

9                      16000             0.4604             7366.4

10                      16000             0.4224             6758.4

========================================================

                                          ∑( Cash flow × PVF) = 79,347

========================================================

taking the PVF to 5 decimal places will make 79,347 ≈ 79,348

8 0
3 years ago
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