GmbH manufactures and sells pens. Present sales output is 5million annually at a selling price of $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit.

Required (consider each case separately)

1. What is the present operating profit for the year?
2. What is the present breakeven point in revenue?
3. Calculate the new operating profit for each of the following changes:
   • a) A $0.04 per unit increase in variable cost
   • b) A 10% increase in fixed cost, and a 10% in units sold
   • c) A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable costs and a 40% increase in units sold.