The Carbon Copy produces cartridge ribbons for electronic typewriters. The ribbons are sold to mail-order distributors for $4.80. Manufacturing and other costs in $ are as follows:

Variable Costs per Unit	Fixed Costs per Month
Direct Materials 2.00 Direct Labor 0.20 Factory Overhead 0.25 Distribution 0.05 Total 2.50	Factory Overhead 15,000 Selling and Administration 5,000

The variable distribution costs are for transportation to mail-order distributors. The current monthly production and sales volume is 15,000. Monthly capacity is 20,000 units.

Requirements:

Determine the effect of each of the following on monthly profits. Each situation is to be evaluated independent of all others.

a. A $1.50 increase in the unit selling price should result in a 1,800 decrease in monthly sales.

b. A $1.8 decrease in the unit selling price should result in a 6,000 unit increase in monthly sales. However, because of capacity constraints, the last 1,000 units would be produced during overtime, when the direct labor costs increase by 50 percent.

c. An Australian distributor has proposed to place a special one-time order for 8,000 units at a special price of $4 per unit. The distributor would pay all transportation costs. There would be additional fixed selling and administration costs of $500. Assume overtime production is not possible.

d. A Mexican manufacturer has offered a one-year contract to supply cartridges for the ribbons at a cost of $1.00 per unit. If Carbon Copy accepts the offer, they will be able to reduce variable manufacturing costs by 40 percent and rent some space currently used to manufacture cartridges for $1,000 per month.

e. The cartridge ribbons are currently unpackaged; that is, they are sold in bulk. Packaging them individually would increase costs by $0.10 per unit. However, the units could now be sold for $5.05.