Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price Variable costs Fixed costs 23 per unit 5 per unit 26,000 per month Assume that the projected number of units sold for the month is 5,500. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? 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?
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price Variable costs Fixed costs 23 per unit 5 per unit 26,000 per month Assume that the projected number of units sold for the month is 5,500. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? 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
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D) is what i need assistance with
Transcribed Image Text:Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics.
Sales price
Variable costs
Fixed costs
23 per unit
5 per unit
26,000 per month
Assume that the projected number of units sold for the month is 5,500. Consider requirements (b), (C), and (d) independently of each
other,
Required:
a. What will the operating profit be?
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?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
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? (Do not round intermediate calculations.)
Operating profit
decreases
by
EX
Required D >
This is a numeric cell,
so please enter
numbers only.
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