7...AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.60 per unit and a selling price of $1.10 per unit. Fixed costs are $14,000. Current sales volume is 35,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would increase to $0.75, but sales volume should jump to 60,000 units due to a higher-quality product.

a.What is the current profit and proposed profit of the sales of AudioCables?(Negative amounts should be indicated by a minus sign.)

current profit ______

Proposed profit ___________

b.Should AudioCables buy the new equipment?

• Yes
• No
• There is insufficient information provided to answer this question