Abercrombie& Fitch, once the favorite of loyalteens, is considering lowering prices on all items it sells in an effort to win them back after several years of sales declines.A&F's total sales were $5 billion lastyear, but they have been declining in the face of a weak economy and an intensively competitive retail environment. Price reductions are often effective in increasingsales, but marketers need to analyze how much sales must go up before a price reduction pays off and increases revenue enough to make the it worth doing. AssumingA&F's gross profit margin is 55 percent and cost of goods sold represents the only variablecost, by what percentage must costs decrease to maintain the gross margin percentage of 55 percent ifA&F lowers prices by 20 percent?

Set the initial price equal to$1.00. Then the new price is $ 0.8. (Round to the nearestcent.)

The new cost per unit needed to maintain the original gross margin percentage is $ 0.36. (Round to the nearestcent.)

The percentage change in cost is %(Round to the nearest wholenumber.)