75. Scarlet Company produces electronic components for electronic systems. The company sells 10,000 components per year...

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75. Scarlet Company produces electronic components for electronic systems. The company sells 10,000 components per year for $15. The capacity is 12,500 units per year. Manufacturing and other costs are as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Total Fixed costs per month: $4.50 Factory overhead $60,000 2.25 Selling and admin. 30,000 2.25 $9.00 Total $90,000 Ocher Company has offered a one-year contract to supply the components at a cost of $8.50 per unit. If Scarlet Company accepts the offer, it will be able to rent unused space to an outside firm for $9,000 per year. All other information remains the same. What is the effect on profits if Scarlet Company buys the components from Ocher Company? 75. Scarlet Company produces electronic components for electronic systems. The company sells 10,000 components per year for $15. The capacity is 12,500 units per year. Manufacturing and other costs are as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Total Fixed costs per month: $4.50 Factory overhead $60,000 2.25 Selling and admin. 30,000 2.25 $9.00 Total $90,000 Ocher Company has offered a one-year contract to supply the components at a cost of $8.50 per unit. If Scarlet Company accepts the offer, it will be able to rent unused space to an outside firm for $9,000 per year. All other information remains the same. What is the effect on profits if Scarlet Company buys the components from Ocher Company?