A company produce and sell a certain product. One year the company reported the following:

Amount of product sold: 3000

Investment: 35 000 000 $

Operating income: 3 500 000 $

Assume markup percentage on full cost to be 6%, and variable unit cost 9000 $.

The company plans to reduce yearly fixed costs with 2 500 000 $, and the variable unit cost with 600 $. Amount of products sold to stay the same.

a) Calculate the selling price when costs have been reduced (with the same markup percentage on full cost, and same amount of products sold).

b) After company reduced costs, the quality also got reduced, and they could no longer manage to sell the same amount of products. They experienced a 10% reduction. Calculate the new operating income.