Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics 5 Sales price Variable costs Fixed conta 21 per unit 8 per unit 26,000 per month Assume that the projected number of units sold for the month is 6,000 Consider requirements (b), (c) and (d) independently of each 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 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Pacific Parts produces a single part for sale. The part sells for $39 per unit Fixed costs are $910,000 annually. Production and sales of 180,000 units annually results in profit before taxes of $2150,000. Required: What is the unit variable cost? Variable cost per unit Hunter & Sons sells a single model of meat smoker for use in the home. The smokers have the following price and cost characteristics Sales price Variable costs Fixed costs 79 per smoker 31 per shoker 384,000 per month Hunter & Sons is subject to an income tax rate of 40 percent. Required: a. How many smokers must Hunter & Sons sell every month to break even? b. How many smokers must Hunter & Sons sell to earn a monthly operating profit of $83,520 after taxes? a. Break-even sales in units b. Number of units to be sold Rio Coffee Shoppe sells two coffee drinks-a regular coffee and a latte. The two drinks have the following prices and cost characteristics Sales price (per cup) Variable costs (per cup) Regular Coffee $1.90 0.60 Latte $ 2.80 1.30 The monthly fixed costs at Rio are $9,520. Based on experience, the manager at Rio knows that the store sells 70 percent regular coffee and 30 percent lattes. Required: How many cups of regular coffee and lattes must Rio sell every month to break even? Break-even Sales in Units Regular coffee Lattes