Reference no: EM132834387

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

a. What is the current profitability of the firm?

b. What is the harm to profitability if variable costs rise by 1 percent, holding all else constant?

c. What is the harm to profitability if fixed costs rise by 1 percent, holding all else constant?

d. What is the harm to profitability if units sold decreases by 1 percent, holding all else constant?

e. What is the harm to profitability if the price falls by 1 percent, holding all else constant?

f. In isolation, failing to manage which aspect of the firm will have the greatest harm on profits-variable costs, fixed costs, units sold, or price?