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Can you please help with this question, thank you! Riveter Industries currently manufactures and sells 20,000 power saws per month, although it has the capacity
Can you please help with this question, thank you!
Riveter 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 in fixed costs. Riveter sells its saws to retail stores for $80 each. Shira Distributors has offered to purchase 5,000 saws per month at a reduced price. Riveter 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 Riveter accepts this price, Riveter' monthly gross profit on sales of power saws will: O Increase by $35,000. Increase by $185,000. O Decrease by $40,000. Decrease by $240,000Step by Step Solution
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