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Please read the case study given below and answer questions given.
Case Study Electron Control, Inc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sensitive test equipment. The yearly volume of output is 15,000 units. The selling price and cost per unit are shown below:
Selling price
$200
Costs:
Direct material
$35
Direct labor
50
Variable overhead
25
Variable selling expenses
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 costs are estimated as:
$25 per unit
$15 per unit
$10 per unit
$100,000 per year
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