Derby Phones is considering the introduction of a new model of headphones with the following...
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Accounting
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics:
| Sales price | $ | 23 | per unit |
| Variable costs | 6 | per unit | |
| Fixed costs | 24,000 | per month | |
Assume that the projected number of units sold for the month is 7,000. Consider requirements (b), (c), and (d) independently of each other.
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.)
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