The Smith Company made and sold 10,000 metal tables last year. When output was between 5,000 and 10,000 tables, its average variable cost was $24. In this output range, each table contributed 60% of its revenue to fixed costs and profit.
a. What was the price per table?
b. If the Smith Company increases its price by 10%, how many tables will it have to sell next year to obtain the same profit as last year?
c. If the Smith Company increases its price by 10%, and if its average variable cost increases by 8% as a result of wage increases, how many tables will it have to sell next year to obtain the same profit as last year?