Assume that a firm produces a consumer product at a, Operation Management

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Assume that a firm produces a consumer product at a

Assume that a firm produces a consumer product at a variable cost of $7.25 and has fixed cost of $75,000 per month. Currently the firm sells 14,000 units per month priced at $14 per unit.

What is the current

Profitability of the firm?

What happens to profitability if:

a) Variable costs increase by 1%?

b) Fixed costs increase by 1%?

c) Units sold decreased by 1%?

d) Price decreases by 1%?

e) Which of the above has the greatest impact to profitability?

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