AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.75 per unit and a selling price of $1.50 per unit. Fixed costs are $14,000. Current sales volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would increase to $0.75, but sales volume should jump to 50,000 units due to a higher-quality product. 

a. What is the current profit and proposed profit of the sales of AudioCables? (Negative amounts should be indicated by a minus sign.) Current profit $ Proposed profit $

 b. Should AudioCables buy the new equipment?

Answer rating: 100% (QA)

a Calculation of current profit Current profit total revenu... View the full answer