ETERNITY CAMERA COMPANY makes cameras and film. The company is introducing a new model this year, the X-VISION 2023. Variable costs are $ 20 per unit. Associated fixed costs are $ 2,000,000 per year for production, advertising and administration. The sales manager believes that if the camera is priced at $ 40, about 250,000 units per year will be sold. If the price is at $ 50, about 200,000 units per year would be sold.

REQUIRED:

a. Determine which price would yield the higher profit'

b. Suppose that for each camera sold, the company usually sells eight packages of film per year. Film sells for $ 6 per package and the variable cost is $ 1.20 per package. Would this information affect your analysis in item 1? Show Computations.