Ohanlon Corporation manufactures numerous products, one of which is called Delta-27. The company has provided the following data about this product:

Unit sales (a)		218,000
Selling price per unit	$	62.00
Variable cost per unit		41.00
Contribution margin per unit (b)	$	21.00
Total contribution margin (a) x (b)	$	4,578,000
Traceable fixed expense		3,550,000
Net operating income	$	1,028,000

Required:

a. Management is considering increasing the price of Delta-27 by 5%, from $62.00 to $65.10. The companys marketing managers estimate that this price hike would decrease unit sales by 10%, from 218,000 units to 196,200 units. Assuming that the total traceable fixed expense does not change, what net operating income will Delta-27 earn at a price of $65.10 if this sales forecast is correct?

b. Assuming that the total traceable fixed expense does not change, if Ohanlon increases the price of Delta-27 to $65.10, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $62.00?