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THIS IS FOR PRICING NOT FINANCE Westside produces pillows with monthly unit sales and costs given...

THIS IS FOR PRICING NOT FINANCE

Westside produces pillows with monthly unit sales and costs given as:

  1. Unit Sales:                         4000 units
  2. Price:                                    $10.00 per unit
  3. Variable costs:                 $5.50 per unit
  4. Fixed costs:                        $15,000

1. Given the production capacity of 4,000, the company has to install another workstation at a monthly cost of $800 (assume no change of variable costs). The new station raises plant capacity by 1,000 units. By what % would sales have to increase to justify a 5% price cut?

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