Westside produces pillows with monthly unit sales and costs given as: Unit Sales: 4000 units Price: $10.00 per unit Variable costs: $5.50 per unit Fixed costs: $15,000

1. Westside is considering a 5% price cut without additional fixed cost. By what % would sales need to increase to keep profit constant for the 5% price cut?

2. Replacing goose feathers with synthetic filler will decrease the unit variable cost by $0.22. By what % would sales have to increase to assure the 5% price cut?

3. Given the production capacity of 4,000, the company has to install another workstation at a monthly cost of $800 (assume no change of variable costs). The new station raises plant capacity by 1,000 units. By what % would sales have to increase to justify a 5% price cut?