Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and finds its current profit of $35,000 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 $40,000 so he can obtain the bank's approval for the loan

Current Situation Percent of sales Sales 140,000 Cost of material 70,000 50 Production cost 21,000 15 Fixed cost 14,000 10 Profit 35,000 25

a) A decrease of % in material (supply-chain) costs is required to yield a profit of $40,000, for a new material cost of $ (Enter your response for the percentage decrease to ono decimal place and enter your response for the new material cost as a whole number.)

b)What percentage improvement is needed in the sales strategy for profit to improve to $40,000? What must sales be for-profit to improve to $40,000?

An increase of ______% in sales is required to yield a profit of $40000, for a new level of sales of $_______

(Enter your response for the percentage increase to one decimal place and enter your response for the new sales as a whole number.)

I got answer for (a)

If everything else remains constant ( the sales value as well as the expenses related to production and fixed costs), the material cost = sales - profit - production cost - fixed cost

Material cost = 140000-40000-21000-14000

= 65000

% decrease needed =100*( decrease / original cost)

100*5000/70000 = 7.1428%

please answer for (b)

Thanks