Last month Globrite sold 24,000 litres of paint. The variable costs were 2.70 per litre and each litre contributed 25% of its revenue to fixed costs and profits. It has just discovered a new supplier which will enable it to both reduce its cost by 0.40 per litre and to improve its quality. However, it estimates that it will have to spend another 3000 on advertising per month to inform customers of the improvement. Profits last month were 10,000.

a) Estimate the previous month's cost function.

b) What is the new cost function with the new supplier?

c) How many litres will Globrite have to sell to increase profit by 20%, assuming it keeps its price the same?

d) If Globrite can raise its price by 10%, what difference will this make to the sales in part c) above?