Change in Contribution Margin

Head Pops Inc. manufactures two models of solar$-$powered, noise$-$canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market

research indicates that $25,400$ additional Sun Sound and $27,700$ additional Ear Bling headphones could be sold. The operating income by unit of product is as follows:

Prepare an analysis indicating the increase or decrease in total profitability if $25,400$ additional Sun Sound and $27,700$ additional Ear Bling headphones are produced and sold, assuming

that there is sufficient capacity for the additional production. Round your per unit answers to two decimal places.

Head Pops Inc.

Analysis