South Park Software, Inc. produces innovative interior decorating software that it sells to design studios, home furnishing stores, and so on. The yearly volume of output is 15,000 units. Selling price and costs per unit are as follows:

Management is evaluating the possibility of using the Internet to sell its software directly to consumers at a price of $300 per unit. Although no added capital investment is required, additional shipping and handling costs are estimated as follows:

Calculate the incremental profit that South Park would earn by customizing its instruments and marketing them directly to endusers.

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Selling Price $250 Costs Direct material Direct labor Variable overhead S40 60 30 25 20 $175 Variable selling expenses Fixed selling expenses Unit profit before tax S75 Direct labor S30 per unit Variable overhead $5 per unit Variable selling expenses S2 per unit Fixed selling expenses S20 000 per year