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Electron control, inc sells voltage regulates to other manufactures who then customize and distrivbutes the production to quality assurance lab for their sensitive test equipments . the yearly volume of output is 15000 unit .. the selling price and cost per unit are shown below.: Selling price $200 Cost $35 Direct labour 50 Variable overhead 25 Variable selling expensive 25 Fixed selling expenses 15 150 Unit profit before tax $ 50 Management is evaluating the alternative of performing the necessary customizing to allow electron control to sell its output directly to Q/A labs for $275 per unit . although no added investment is required in productive facilities additional processing cost are estimated as : Direct labour $25 per unit Variable overhed $15 per unit Variable selling expensive $10 per unit Fixed selling expenses $ 100000 per year Calculate the incremental profit electron control would earn by customizing its instruments and marketing directly to end user
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