Required information Exercise 3-31 and 3-32 (Algo) (LO 3-1) [The following information applies to the questions displayed below.] Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics. $ Sales price Variable costs Fixed costs 16 per unit 4 per unit 51,000 per month Exercise 3-32 (Algo) Basic Decision Analysis Using CVP (LO 3-1) Assume that the company plans to sell 6,000 units per month. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 15 percent? Increases by 30 percent? c. What is the impact on operating profit if variable costs per unit decrease by 15 percent? Increase by 30 percent? d. Suppose that fixed costs for the year are 15 percent lower than projected, and variable costs per unit are 15 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Required A Required B Required C Required D What will be the operating profit? Operating profit Required A Required B Required C Required D What is the impact on operating profit if the sales price decreases by 15 percent? Increases by 30 percent? Sales price decreases by 15 percent: Sales price increases by 30 percent: Operating profit Operating profit Required A Required B Required C Required D What is the impact on operating profit if variable costs per unit decrease by 15 percent? Increase by 30 percent? Variable costs per unit decrease by 15 percent: Variable costs per unit increase by 30 percent: Operating profit Operating profit Required A Required B Required C Required D Suppose that fixed costs for the year are 15 percent lower than projected, and variable costs per unit are 15 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Operating profit by Required information Exercise 3-31 and 3-32 (Algo) (LO 3-1) [The following information applies to the questions displayed below.] Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics. $ Sales price Variable costs Fixed costs 16 per unit 4 per unit 51,000 per month Exercise 3-32 (Algo) Basic Decision Analysis Using CVP (LO 3-1) Assume that the company plans to sell 6,000 units per month. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 15 percent? Increases by 30 percent? c. What is the impact on operating profit if variable costs per unit decrease by 15 percent? Increase by 30 percent? d. Suppose that fixed costs for the year are 15 percent lower than projected, and variable costs per unit are 15 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Required A Required B Required C Required D What will be the operating profit? Operating profit Required A Required B Required C Required D What is the impact on operating profit if the sales price decreases by 15 percent? Increases by 30 percent? Sales price decreases by 15 percent: Sales price increases by 30 percent: Operating profit Operating profit Required A Required B Required C Required D What is the impact on operating profit if variable costs per unit decrease by 15 percent? Increase by 30 percent? Variable costs per unit decrease by 15 percent: Variable costs per unit increase by 30 percent: Operating profit Operating profit Required A Required B Required C Required D Suppose that fixed costs for the year are 15 percent lower than projected, and variable costs per unit are 15 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Operating profit by