2 Absolute Change in Profits refers to the raw difference in profit figures between two periods. Percentage Change in Profits is the relative change in profit figures between two periods, expressed as a percentage. It provides a more contextually rich understanding of the change, as it relates the absolute change to the base (usually the older) value. It's computed as \% Change = (Absolute Change / Old Profit) 100 Case Questions The following questions are designed to evaluate various aspects of LuzCoconut Inc.'s strategic decisions and their potential financial implications. For each question, calculate the absolute and percentage change in LuzCoconut Inc.'s current net profit 3. A) Operational Expenditures \& Cost Efficiency: This section delves into the company's approach to operational costs, focusing on opportunities to achieve efficiencies in R\&D, marketing, and administrative operations. 1. Over the past year, LuzCoconut Inc. successfully launched a series of new products based on previous R\&D initiatives. Given the success and expected market sustainability of these products, the management believes that they can momentarily dial back on R\&D expenses. What would be the impact on LuzCoconut Inc.'s financial performance if we reduce the R&D expenditure by 10% ? 2. A recent brand awareness survey revealed that LuzCoconut Inc. has attained high recognition and loyalty rates in its primary markets. Believing that the brand is currently strong, the marketing team suggests temporarily cutting back on the advertising budget. What would be the impact on LuzCoconut Inc.'s financial performance if it reduces the Advertising \& Promotion Expense by 10% ? 3. Following a strategic review, LuzCoconut Inc.'s management identified areas of potential efficiencies, particularly in its administrative departments. By optimizing operations, streamlining processes, and leveraging technology, the company believes it can achieve a 10% reduction in overall fixed costs without compromising quality or employee satisfaction. What would be the impact on LuzCoconut Inc.'s financial performance if we reduce all fixed costs by 10% ? 3 Assume variable costs will change proportionally with volume. Make no assumptions other than given in each question. Nonetheless, it's essential to incorporate inevitable changes in other items in certain circumstances e.g., shifts in volume inherently influence variable costs