Spencer Company recently became aware of the large total

discounts on its orders and would like to know the impact on

profit. The company computed its operating profit as follows:

Net sales after discounts $$200,000$

Variable costs $80,000$

Contribution margin $120,000$

Fixed costs $70,000$

Operating profit $$50,000$

a$)$ Suppose Spencer's salespeople reduce their sales discounts,

resulting in a $10\%$ increase in net revenues. Assuming that the

total variable and fixed costs above do not change, by what

percent would operating profits increase?

Enter as a percent, one decimal. Answer $1$

$0$

$\%$

b$)$ Refer to the original information in this problem. Suppose

Spencer's salespeople increase their sales discounts, resulting in

a $2\%$ decrease in net revenues. Assuming that the total

variable and fixed costs above do not change, by what percent

would operating profits decrease?

Enter as a positive percent, one decimal. Answer $2$

$0$

$\%$