Price and cost for Warner Clothing:

Sales price: 15$ per unit

Variable costs: 3$ per unit

Fixed costs: 42000 per month

Assume that the company plans to sell 5000 units per month. Consider requirements b, c, d independently of each other:

a) What will be the operating profit?

b) What is the impact on operating profit if the sales price decreases by 10%? Increase by 20%?

c) What is the impact on operating profit if variable costs per unit decrease by 10%? Increase by 20%?

d) Suppose that fixed cost for the year are 10% lower than projected and variable cost per unit are 10% higher than projected. What impact will this cost changes have on operating profit for the year? Will profit go up or down and how much?-*