Abercrombie & Fitch, once the favorite of loyal teens, is considering lowering prices on all items it sells in an effort to win them back after several years of sales declines. A&F's total sales were...

Extracted text: Abercrombie & Fitch, once the favorite of loyal teens, is considering lowering prices on all items it sells in an effort to win them back after several years of sales declines. A&F's total sales were $3 billion last year but they have been declining in the face of a weak economy and an intensively competitive retail environment. Price reductions are often effective in increasing sales, but marketers need to analyze how much sales must go up before a price reduction pays off and increases revenue enough to make the it worth doing. Assuming A&F's gross profit margin is 55 percent and cost of goods sold represents the only variable cost, by how much sales increase to maintain the same gross profit margin in terms of absolute dollars it A&F lowers prices by 10 percent? The current gross profit is $ 1. 65 billion (Round to two decimal places.) Set the initial price equal to $1 00 Then the new price is $9 (Round to the nearest cent) The new gross margin percentage in decimal form equals 55 (Round to four decimal places