Westside produces pillows with monthly unit sales and costs given as:  Unit Sales: 4000 units...

Westside produces pillows with monthly unit sales and costs given as:  Unit Sales: 4000 units  Price: $10.00 per unit  Variable costs: $5.50 per unit  Fixed costs: $15,000

1. Westside is considering a 5% price cut without additional fixed cost. By what % would sales need to increase to keep profit constant for the 5% price cut?

2. Replacing goose feathers with synthetic filler will decrease the unit variable cost by $0.22. By what % would sales have to increase to assure the 5% price cut?

3. Given the production capacity of 4,000, the company has to install another workstation at a monthly cost of $800 (assume no change of variable costs). The new station raises plant capacity by 1,000 units. By what % would sales have to increase to justify a 5% price cut?

Expert Solution

ekkarill92 answered 1 day ago

THIS IS FOR PRICING NOT FINANCE Westside produces pillows with monthly unit sales and costs given...

THIS IS FOR PRICING NOT FINANCE Westside produces pillows with monthly unit sales and costs given as:  Unit Sales: 4000 units  Price: $10.00 per unit  Variable costs: $5.50 per unit  Fixed costs: $15,000 1.Replacing goose feathers with synthetic filler will decrease the unit variable cost by $0.22. By what % would sales have to increase to assure the 5% price cut?

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