#12

Link: Excel Lily Industries currently manufactures and sells 20,000 power saws per month, although it has the capacity to produce 35,000 units per month. At the 20,000-unit-per-month level of production, the per-unit cost is $65, consisting of $40 in variable costs and $25 hr fixed costs. Lily sells its saws to retail stores for $80 each. Shira Distributors has offered to purchase 5,000 saws per month at a reduced price. Lily can manufacture these additional units with no change in its present level of fixed manufacturing costs. Assume that Shira Distributors offers to purchase the additional 5,000 saws at a price of $47 per unit. If Lily accepts this price, the company's monthly gross profit on sales of power saws will: Increase by $35.000 Increase by $185,000 Decrease by $40,000 Decrease by $240,000