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Question: Monty Machine and Tools currently prices its hammers at $14 per unit. The corresponding unit variable cost is $9 and the unit fixed cost is $2 per when 10300 hammers are produced and sold. Monty is considering increasing the price of its hammers to $17.50 since its suppliers have increased the cost of the materials used in production which has caused the unit variable cost to increase to $10. What is Monty's projected operating income with the new unit selling price and new unit variable cost if it is only able to produce and sell 7500 hammers?
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