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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

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$12per unitVariable costs2per unitFixed costs40,000per month

Assume that the company plans to sell 6,000 units per month. Consider requirements (b), (c), and (d) independently of each other.

What is the impact on operating profit if the sales price decreases by 15 percent? Increases by 30 percent?

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