Problem $7-14($Algo$)$

AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $$0\mathrm{.}50$ per unit and a selling price of $$1\mathrm{.}40$ per unit. Fixed costs are $$14,000.$ Current sales volume is $35,000$ units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $$6,000.$ Variable costs would increase to $$0\mathrm{.}75,$ but sales volume should jump to $50,000$ units due to a higher$-$quality product.

a$.$ What is the current profit and proposed profit of the sales of AudioCables? $($Negative amounts should be indicated by a minus sign.$)$

b$.$ Should AudioCables buy the new equipment?

multiple choice

Yes

No

There is insufficient information provided to answer this question