Add a product line: manufacturer LO 19.7 Camilla's, a high-fashion dress manufacturer, is planning to market a new cocktail dress for the coming year. Camilla's supplies retailers primarily in the eastern states of Australia. Four metres of material are required to lay out the dress pattern. Some material that could be sold remains after cutting. The leftover material could also be used to manufacture a matching wrap and handbag. However, if the leftover material is used for the wrap and handbag, more care will be required in the cutting operation, which will increase the cutting costs. The company expects to sell 1 250 dresses. Market research reveals that dress sales will be 20 per cent higher if a matching wrap and handbag are available. The market research indicates that the wrap and handbag will be saleable only as accessories with the dress. The combination of dresses, wraps and handbags expected to be sold by retailers is as follows: Percentage of total Complete sets of dress, wrap and handbag 70% Dress and wrap 6% Dress and handbag 15% Dress only 9% Total 100% The material used in the dresses costs $30 a metre, or $120 for each dress. The cost of cutting the dress if the wrap and handbag are not manufactured is estimated at $48 a dress, and the left-over material can be sold for $12 per dress. If the wrap and handbag are manufactured, the cutting costs will increase by $21.60 per dress and there will be no saleable remnants. The selling prices and the costs to complete the three items once they are cut are shown in the table below. Unit cost to complete (excludes costs of material and cutting operation) Selling price per unit Dress $480.00 $192.00 Wrap 66.00 46.80 Handbag 22.80 15.60 Required: 1. Calculate Camilla's incremental profit or loss from manufacturing the wraps and handbags in conjunction with the dresses. Assume that Camilla's produces only sufficient product to meet sales demand. 2. Identify any other issues that could influence Camilla's management in their decision to manufacture wraps and handbags to match the dresses