Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? 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?
Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Chap. 3 Homework Assignment i
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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 characteristics.
1.66
points
Sales price
15 per unit
3 per unit
42,000 per month
Skipped
2$
Variable costs
Fixed costs
еВook
Assume that the company plans to sell 5,000 units per month. Consider requirements (b), (c), and (d) independently of each other.
Print
Required:
a. What will be the operating profit?
b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent?
c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent?
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?
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Transcribed Image Text:Chap. 3 Homework Assignment i
Saved
Help
Save & Exit
Submit
Check my work
5
!
Required information
Part 2 of 2
[The following information applies to the questions displayed below.]
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.
1.66
points
Sales price
15 per unit
3 per unit
42,000 per month
Skipped
2$
Variable costs
Fixed costs
еВook
Assume that the company plans to sell 5,000 units per month. Consider requirements (b), (c), and (d) independently of each other.
Print
Required:
a. What will be the operating profit?
b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent?
c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent?
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?
References
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