Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price $ 12.00 per case Variable costs 5.50 per case Fixed costs 403,000 per year Assume that the company plans to sell 77,000 units annually. Consider requirements (b), (c), and (d) independently of each other. Required: What will be the operating profit? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 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? Note: Do not round intermediate calculations.
Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics:
| Sales price | $ 12.00 | per case |
|---|---|---|
| Variable costs | 5.50 | per case |
| Fixed costs | 403,000 | per year |
Assume that the company plans to sell 77,000 units annually. Consider requirements (b), (c), and (d) independently of each other.
Required:
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What will be the operating profit?
-
What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent?
Note: Do not round intermediate calculations.
-
What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent?
Note: Do not round intermediate calculations.
-
Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 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?
Note: Do not round intermediate calculations.
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