Norwood Industries has annual fixed costs of $1.8 million. Unit variable costs are currently 55% of the unit selling price.
a. What annual revenue is required to break even?
b. What revenue would result in a loss of $100,000 in a year?
c. What annual revenue would produce a profit of $300,000?
d. Market research indicates that if prices are increased by 10%, total revenue will remain at the Part (c) amount because the higher prices will be offset by reduced sales volume. Will the operating profit remain at $300,000? Present calculations to justify your answer.