Required

Determine the effect each of the following situations would have on monthly profits. Each situation

should be evaluated independently of all others.

a. Product A is discontinued.

b. Product A is discontinued, and the subsequent loss of customers causes sales of Product B to decline

by 150 units.

c. The selling price of A is increased to $25 with a sales decrease of 250 units.

d. The price of Product B is increased to $20 with a resulting sales decrease of 300 units. However,

some of these customers shift to Product A; sales of Product A increase by 200 units.

e. Product A is discontinued, and the plant in which A was produced is used to produce D, a new prod-

uct. Product D has a unit contribution margin of $2. Monthly sales of Product D are predicted to be

1,500 units.

f. The selling price of Product C is increased to $35, and the selling price of Product B is decreased to

$10. Sales of C decline by 350 units, while sales of B increase by 400 units.