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Warner Clothing is considering the introduction of a new baseball cap for sales by local...

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Accounting

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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 Sales price Variable costs Fixed costs 12 per unit 2 per unit 40,000 per month Assume that the company plans to sell 6,000 units per month. Consider requirements (b), (c), and (d) Independently of each other. Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 15 percent? Increases by 30 percent? c. What is the impact on operating profit if variable costs per unit decrease by 15 percent? Increase by 30 percent? d. Suppose that fixed costs for the year are 15 percent lower than projected, and variable costs per unit are 15 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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