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Question - Lakeside Inc. produces a product that currently sells for $57.60 per unit. Current production costs per unit include direct materials, $22; direct labor, $24; variable overhead, $11.00; and fixed overhead, $11.00. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit.
Required - What would be the incremental profit or loss if Lakeside could sell the refined version of its product for $64 per unit?
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