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Derby Phones is considering the introduction of a new model of headphones with the following price and cost c 20 per unit Sales price Variable
Derby Phones is considering the introduction of a new model of headphones with the following price and cost c 20 per unit Sales price Variable costs Fixed costs 8 per unit 27,000 per month Assume that the projected number of units sold for the month is 7,000. Consider requirements (b), (c), and (d) inde other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent d. Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 per projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By perating profit be? act on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? act on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? xed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher tha mpact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Answer is not complete
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