Louie Optics manufactures a underwater digital camera. The companys newest model is very popular, but it has an inventory of 5,000 old models for which there is little demand. The company is considering the following options for disposing of these old models:

1. Sell them to a discount mail-order company at a total price of $1,900,000. The mail-order firm would then sell these old models at a unit price of $480.

2. Convert them to new models at a remanufacturing cost of $600 per unit. These new models then could be sold to camera stores for $1,000 each.

The old models had been manufactured at a cost of $525 per unit. The cost of manufacturing new models, however, normally amounts to $700 per unit. Instructions a. Perform an incremental analysis of the revenue, costs, and profit resulting from converting the old models to new models as compared with selling them to the mail-order firm.

	Sell to Mail-order firm	Convert to new model	incremental analysis
Incremental Sales Revenue
Incremental Manufacturing costs
Incremental cost(benefit)