Hau Lee$$ Furniture, Inc., spends $50\%$ of its sales dollars in the supply chain and finds its current profit of $$$$16,000$ inadequate. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Hau would like to improve the profit line to $$$$21,000$ so he can obtain the$$ bank's approval for the loan.

Current Situation

Sales

$$$$80,000$

Cost of material

$$$$40,000(50\%)$

Production costs

$$$$16,000(20\%)$

Fixed cost

$$$$8,000(10\%)$

Profit

$$$$16,000(20\%)$

Part $2$

$$a$)$ What percentage improvement is needed in the supply chain strategy for profit to improve to $$$$21,000?$ What is the cost of material with a $$$$21,000$profit$?$