Outback Outfitters sells recreational equipment One of the c

Outback Outfitters sells recreational equipment. One of the company\'s products, a small camp stove, sells for $110 per unit. Variable expenses are $77 per stove, and fixed expenses associated with the stove total $138,600 per month.

Solution

Contribution Income Statement 9000 Stioves 11250 stoves Total Per unit Total Per unit Sales revenue 990000 110 1,113,750 99 Les: variable cost 693000 77 866250 77 Contribution margin 297000 33 247,500 22 Less: Fixed cost 138600 138,600 Net Income 158400 108,900 New Selling price: 99 Less: variable cost 77 Contribution margin per unit 22 Total fixed cost 138600 Add: Desired profit 75000 Desired contribution 213600 Target Sales in units: Desired contribution/ CM per unit 213600/22 = 9709 units