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Last year Minden Company introduced a new product and sold 15,000 units of it at a price of $70 per unit. The product's variable expenses are $40 per unit and its fixed expenses are $360,000 per year.

(a)

What is the product's break-event point in unit sales (i.e., number of units sold)?

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(b)

At the current level of sales, if the number of units sold increases by 15%, what is the percentage change in the product's profit? Please use Operating Leverage for the analysis.

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(c)

The company has conducted a marketing study that esimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., selling price will only be $68, $66, $64, etc), what is the maximium annual profit that it can earn on this product? What are the sales volume (in unit) and selling price per unit that generate the maximum profit?

(Show your analysis in the following space)

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