Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 12

A company wants to evaluate the effects of a reduction in material cost of 3 percent and an increase in sales of 15 percent on a product with the following current characteristics: labor costs of $1,250,000, material costs of $5,000,000, overhead of $710,000, and sales of $8,000,000. What are the effects on net income with a 3 percent reduction in material costs?
What is the effect with a 15 percent increase in sales?