Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Presently, the company sells 99,000 units for $75 per unit. The variable production costs are $45, and fixed costs amount to $1,590,000. Production engineers have advised management that they expect unit labor costs to rise by 20 percent and unit materials costs to rise by 15 percent in the coming year. Of the $45 variable costs, 40 percent are from labor and 20 percent are from materials. Variable overhead costs are expected to increase by 25 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 6 percent as a result of increased taxes and other miscellaneous fixed charges.

The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 10 percent during the year.

FRequired :` (a) Compute the volume in units and the caller =GLEE LEVEL necessary to maintain the present profit level . SIS Summing that the maximum price increase is implemented . ( Found only your intermediate per unit* Cost calculations to 2 decimal places . Round Up your Volume in Units final answer to the MEaTEST whole unit . Found your Sales final answer to the nearest whole dollar -! Volume in units SELES ( ^ Compute the volume of sales and the dollar sales level necessary to provide the 10 percent increase in profits . assuming that the maximum price increase is implemented _ ( Found only your intermediate per unit cost calculations to & decimal places _ Round up your Volume in Units final answer to the nearest whale unit Round your Sales final answer to the nearest whale dollar . !` Volume in unite SELES ( C) If the volume of sales were to remain at ED.JJJ units , what price change would be required to attain the 10 percent increase in profits ?" Calculate the new price. ( Found your answer to 2 decimal places . !" NEW PRICE