Incremental Analysis:

If production does increase dramatically after their presentation on Shark Tank, the Lees will need more space for display. They have two options. Option 1 is to rent out a spacious warehouse nearby. If they pursue this option, their rent will be $2400 per month, and utilities are estimated to cost an additional $350 per month. Their second option, Option 2, is to rent a smaller storefront space that is also nearby. The storefront rent is$1950 per month. However, utilities will likely only cost an additional$250 per month. They want to compare their options over one year (since each rental contract is a one-year commitment). What is the incremental analysis if the Lees choose Option 1 over Option 2?