Question - Break-Even and Target Profit Analysis
Reveen Products sells camping equipment. One of the company's products, a camp lantern, sellsfor $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month.
Refer to the following data (At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in a selling price will result in a 25% increase in the number of lanterns sold each month). How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $72,000 per month?