(Continue from the above Profit-and-loss question) Given the same sales volume, the competition's pressure forces the company to decrease its sales price by 5%. The firm in turn successfully presses its suppliers and decreases the purchase costs by 5% too. What would be resulted profit then?

a. 1 b.2 c. 3 d.4 e. 5 f. 6 g. 10

1. Given the following profit-and-loss statement of firm with gross sales of $100 million and a profit of $5 million. Current (in $million) Sales $100 Purchased goods and services 60 Labor and salaries 10 Overhead 25 Profit $5 The company spends 60% of its sales (on a unit basis) on purchased goods and services and 10% of its sales (on a unit basis) on labor and salaries. Overhead is relatively fixed regardless of sales volume (units) or sales price. If the sales volume increases by 10% over the year given the same price, what would be resulted profit then