Hi-Performance, Inc. produces a fuel additive that increases engine horsepower. Chemical ZYX3 is an ingredient of the fuel additive. Hi-Performance currently produces Chemical ZYX3 in its own factory. Hi-Performance uses 100,000 gallons each year in its production process. An analysis of the costs that Hi-Performance incurs producing Chemical ZYX3 is as provided below.

Direct materials	$ 10.00
Direct labor	$ 5.00
Other variable costs	$ 2.50
Fixed costs	$ 5.00
Total	$ 22.50
Total fixed costs	$ 5,000,000
Quantity needed (gallons)	100,000

Hi-Performance incurs $5 million of fixed costs each year.

What is the effect on profits of accepting an offer from Additives-R-Us to supply Chemical ZYX3 at a price of $16 per gallon?