#1 Argentina Partners is concerned about the possible effects of ination on its operations. Presently, the company sells 60,000 units for $30 per unit. The variable production costs are $15, and xed costs amount to $700,000. Production engineers have advised management that they expect unit labor costs to rise by 15 percent and unit materials costs to rise by 10 percent in the coming year. Of the $15 variable costs, 50 percent are from labor and 25 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 10 percent. It is also expected that xed costs will rise by 5 percent as a result of increased taxes and other miscellaneous xed charges. The company wishes to maintain the same level of pro t in real dollar terms. It is expected that to accomplish this objective, pro ts must increase by 6 percent during the year. Required a. Compute the volume in units and the dollar sales level necessary to maintain the present prot level, assuming that the maximum price increase is implemented. b. Compute the volume of sales and the dollar sales level necessary to provide the 6 percent increase in prots, assuming that the maximum price increase is implemented. c. If the volume of sales were to remain at 60,000 units, what price increase would be required to attain the 6 percent increase in prots? #2 Alameda Tile sells products to many people remodeling their homes and thinks that they could protably offer courses on tile installation, which might also increase the demand for their products. The basic installation course has the following (tentative) price and cost characteristics: Tuition . . . . . . . . . . . . . . . . . . . . . . . $ 400 per student Variable costs (tiles, supplies, and so on) . . . . . . 240 per student Fixed costs (advertising, salaries, and so on) . . . . . . . . . . . 80,000 per year Required a. What enrollment will enable Alameda Tile to break even? b. How many students will enable Alameda Tile to make an operating prot of $40,000 for the year? c. Assume that the projected enrollment for the year is 800 students for each of the following (considered independently): 1. What will be the operating prot (for 800 students)? 2. What would be the operating prot if the tuition per student (that is, sales price) decreased by 10 percent? Increased by 20 percent? 3. What would be the operating prot if variable costs per student decreased by 10 percent? Increased by 20 percent? 4. Suppose that xed costs for the year are 10 percent lower than projected, whereas variable costs per student are 10 percent higher than projected. What would be the operating prot for the year?