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The company is thinking os special producing one of its CD. To do so would increase variable costs for all CDs by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of CDs sold by 10%, and the average sales price would increase $0.20 per unit. The company currently sells 491,740 CDs at an average selling price of $26.50. The manufacturing costs are variable: $6,863,512 and fixed: $2,050,140. Selling and administrative costs are variable: $2,651,657 Variable and fixed: $794,950
Question (1) The company begins a special producing its CDs, how would that affect the company.
Question (2) Suppose the average sales price per CD unit did not increase, when the company began its special producing the CDs, what would be the effect on the company
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