Nantucket Optics Company manufactures high-end sunglasses that it sells to mail-order distributors for $60. Manufacturing and other costs follow:

Variable Costs per Unit

Direct materials ......... $ 13

Direct labor............. 12

Factory overhead ....... 2

Distribution ............. 3

Total .................. $30

Fixed Costs per Month

Factory overhead .......... $20,000

Selling and administrative ... 10,000

Total .................... $30,000

The variable distribution costs are for transportation to mail-order distributors. The current monthly production and sales volume is 5,000 units. Monthly capacity is 6,000 units.

Determine the effect of each of the following independent situations on monthly profits.

e. Nantucket Optics provides a designer case for each pair of sunglasses that it manufactures. A

Chinese manufacturer has offered a one-year contract to supply the cases at a cost of $4 per unit. If Nantucket Optics accepts the offer, it will be able to reduce variable manufacturing costs by 10%, reduce fixed costs by $1,500, and rent out some freed-up space for $2,000 per month.

f. The glasses also come with four different color inserts that allow the user to change the appearance of the glasses to match her or his clothing. Making the glasses in only one color without the color inserts would reduce the cost by $5, and Nantucket Optics believes the selling price would have to decrease to $55

Can you please tell me how you reach the answer, rather that just giving me that answer?