Empire Glassworks makes glass test tubes for scientific use. The company follows marginal costing for its management accounting and control purposes. Materials cost $1.50 per test tube, and the manufacturing labour are paid a wage rate of $28 per hour. The machine producing test tubes produces 10 test tubes per hour. Fixed manufacturing costs for test tubes are $27,000 per month. Fixed non-manufacturing costs are $11,000 per month.

Required:

(1) Assume that Empire Glassworks manufactures and sells 5,000 test tubes in February 2021. A competitor, Freds Glassworks, sells test tubes for $10 each. Can Empire Glasswork match Freds Glassworks price and still make a profit on the flanges? Support your answer with necessary calculations.

(2) If Empire Glassworks manufactures and sells 10,000 test tubes in February 2021, can Empire Glassworks be profitable if it matches Freds Glassworks selling price of $10? Support your answer with necessary calculations.