1) | Breakeven point = Fixed expenses/ Contribution margin per unit | ||
Contribution margin per unit = Selling price - variable cost | |||
= $50-$32 | |||
= $18 per unit | |||
Breakeven point in units = $108000/$18 | |||
= 6000 units. | |||
Breakeven point in Dollars = 6000 units * $50 per unit | |||
= $300000 | |||
2) | If the variable costs increase as a percentage of selling price, contribution per unit | ||
margin decreases and this will increase the Brekeven point. | |||
3) | Income statement - Present | ||
Sales (8000*$50) | $400000 | ||
Less:Variable costs (8000*$32) | $256000 | ||
Conribution Margin | $144000 | ||
Less: Fixed Costs | $108000 | ||
Operating Profit | $36000 | ||
Proposed changes: | |||
Sales units = 8000 * 125% = 10000 units | |||
Selling price = $50*90% = $45 | |||
Income statement - proposed changes | |||
Sales (10000*$45) | $450000 | ||
Less:Variable costs (10000*$32) | $320000 | ||
Conribution Margin | $130000 | ||
Less: Fixed Costs | $108000 | ||
Operating Profit | $22000 | ||
4) | Number of units to be sold = (Fixed costs+Target profit)/Contribution margin per unit | ||
Number of units to be sold@ present rate = ($108000+$35000)/$18 | |||
= 7945 units | |||
Number of units to be sold@ proposed rate = ($108000+$35000)/$13 | |||
= 11000 units |
Check Outback Outfitters sells recreational equipment One of the company's products, a small camp stove, sells...
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $130 per unit. Variable expenses are $91 per stove, and fixed expenses associated with the stove total $179,400 per month Required: 1. Compute the company's break-even point in unit sales and in dollar sales. Break-Even Point Number of stoves Total sales dollars 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or...
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $130 per unit. Variable expenses are $91 per stove, and fixed expenses associated with the stove total $191,100 per month. Required: 1. Compute the company's break-even point in unit sales and in dollar sales. Break-Even Point Number of stoves Total sales dollars 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or...
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $90 per unit. Variable expenses are $63 per stove, and fixed expenses associated with the stove total $116,100 per month. Required: 1. Compute the company's break-even point in unit sales and in dollar sales. Break-Even Point Number of stoves Total sales dollars 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or...
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 $201.600 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...
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 $144,000 per month. nts 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...
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $150 per unit. Variable expenses are $105 per stove, and fixed expenses associated with the stove total $211,500 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...
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 $205,800 per month. Required: 1. What is the break-even point in unit sales and in dollar sales? Break-even point in unit sales Break-even point in dollar sales 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in...
please explain 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 $184,800 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...
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $50 per unit. Variable expenses are $32 per stove, and fixed expenses associated with the stove total $108,000 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...
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 $205,800 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...