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6.

Incremental Analysis:

the Lees will need more space for production. They have two options. Option 1 is to rent

out a spacious warehouse nearby. If they pursue this option, there rent will be $1200 per month

and utilities are estimated to cost an additional $350 per month. Their second option, Option 2,

is to rent a smaller storefront space that is also nearby. The storefront rent is $1350 per month.

However, utilities will likely only cost an additional $150 per month. They want to compare their

options over one year's time (since each rental contract is a 1 year commitment). What is the

incremental analysis if the Lees choose Option 1 over Option 2