Last year Minden Company introduced a new product and sold 15,000 units of it at a price of $70 per unit. The product's variable expenses are $40 per unit and its fixed expenses are $360,000 per year.

(a)

What is the product's break-event point in unit sales (i.e., number of units sold)?

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(b)

At the current level of sales, if the number of units sold increases by 15%, what is the percentage change in the product's profit? Please use Operating Leverage for the analysis.

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(c)

The company has conducted a marketing study that esimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., selling price will only be $68, $66, $64, etc), what is the maximium annual profit that it can earn on this product? What are the sales volume (in unit) and selling price per unit that generate the maximum profit?

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