Your client is a food container producer and currently sells 20,000 units per year. This container is priced at $12 on the market. The raw material cost and the labor cost is $5 and $4 per unit respectively. The fixed cost is $ 30,000 per year. To gain more profit, the company is planning to decrease the price of the container by 25%, which will increase the sales volume by 30%. The raw material cost will decrease by 20% thanks to the larger purchase volume. Meanwhile, the labor cost and the fixed cost will stay the same. How much profit can the company make in these two cases respectively? 

a. $ 30,000, $ 26,000 

b. $ 30,000, $ - 4,000 

c. $ 40,000, $ 26,000 

d. $ 40,000, $ - 4,000

Answer rating: 100% (QA)

Lets calculate the profit in each scenario Original Scenario Selling price per unit 12 Raw material ... View the full answer