Vitel Products manufactures and sells camping equipment. One of the company’s products, a pup tent, sells for $120 per unit. Variable expenses are $72 per tent, and fixed expenses associated with the tent total $168,960. Their tax rate is 40%.

REQUIRED (SHOW WORK)

1. Compute the company’s break-even point in number of tents and in total sales dollars.

At present, the company is selling 4,000 tents per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of tents sold each month. What will be the operating income if the change in selling price is made?

Under the original conditions, how many tents will have to be sold to earn a net income of $42,060?