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	$	17	per unit
Variable costs		3	per unit
Fixed costs		756,000	per year

Assume that the company plans to sell 7,000 units per month. Consider requirements (b), (c), and (d) independently of each other.

Required:

d. Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 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?