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-- ! Required information [The following information applies to the questions displayed below.] Warner Clothing is considering the introduction of a new baseball cap

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-- ! Required information [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 $ 19 per unit 3 per unit Fixed costs 54,000 per month Assume that the company plans to sell 8,000 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 5 percent? Increases by 10 percent? c. What is the impact on operating profit if variable costs per unit decrease by 5 percent? Increase by 10 percent? d. Suppose that fixed costs for the year are 5 percent lower than projected, and variable costs per unit are 5 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?

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