Medbury Communications Systems $($MCS$)$ produces mobile radios for arctic and other harsh environments. The costs to manufacture and market the radios at the company$$s normal quarterly volume of $12,000$ units are shown in the following table:

Unit manufacturing costs

Materials $($variable$)$ $ $80$

Labor $($variable$)120$

Overhead $($variable portion$)40$

Overhead $($fixed portion$)96$

Total unit manufacturing costs $ $336$

Unit marketing costs

Variable $40$

Fixed $112$

Total unit marketing costs $152$

Total unit costs $ $488$

Required:

Assume that no connection exists among the situations described in each question below unless otherwise stated. Each is independent. Also assume a regular selling price of $$600$ per unit unless otherwise stated. Ignore income taxes and other costs that are not mentioned in the accompanying table or in the question itself.

Market research estimates that quarterly volume could be increased to $14,000$ units, which is well within production capacity limitations if the price were cut from $$600$ to $$525$ per unit. Assuming that the cost behavior patterns implied by the data in the table are correct.

A$1.$ What would be the impact on quarterly sales, costs, and income? $($Select option "increase" or "decrease", keeping before price reduction as the base. Select "none" if there is no effect.$)$Complete this question by entering your answers in the tabs below.

Market research estimates that quarterly volume could be increased to $14,000$ units, which is well within production capacity limitations if the price were cut from $$600$ to $$525$ per unit. Assuming that the cost behavior patterns implied by the data in the table are correct.

A$1.$ What would be the impact on quarterly sales, costs, and income? $($Select option "increase" or "decrease", keeping before price reduction as the base. Select "none" if there is no effect.$)$

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