The Dubs Division of Fast Company (the parent company) produces wheels for off-road sport vehicles. Dubs has two products, 1 and 2. The two products only differ in how they are marketed. Product 1 is sold in bulk to customizing shops, while Product 2 is sold directly to consumers.

Dub's estimated operating data for the year follows.

Product 1:

Sales ... $300,000;

Var Mfg ... $160,000;

Var G&A ... $40,000;

CM ... $100,000;

Fixed Mfg ... $24,000;

Fixed G&A ... $36,000;

Op. Profits ... $40,000;

Unit Sales ... 1,000.

Product 2:

Sales ... $400,000;

Var Mfg ... $160,000;

Var G&A ... $60,000;

CM ... $180,000;

Fixed Mfg ... $32,000;

Fixed G&A ... $48,000;

Op. Profits ... $100,000;

Unit Sales ... 1,000.

Unless otherwise stated assume the fixed costs given above are allocated costs and unavoidable. To simplify this example, assume Dubs is operating at its capacity of 2,000 units and it is producing and selling 1,000 units each of P1 and P2. As a result of increased foreign competition Dubs expects to have to cut the unit price of P1 by 25% to maintain its sales volume. The accounting records for Dubs indicate that none of the fixed manufacturing overhead or fixed General and Administrative costs are specifically traceable to the manufacture and sale of P1. What would be the total company profit if Dubs stops producing P1 and cuts the price of P2 by 10% anticipating total demand for that product to increase to 1,300 units? If the total profits result in a loss you should express your answer as a negative number such as -2000.

The Dubs Division of Fast Company (the parent company) produces wheels for off-road sport vehicles. Dubs has two products, 1 and 2. The two products only differ in how they are marketed. Product 1 is sold in bulk to customizing shops, while Product 2 is sold directly to consumers.

Dub's estimated operating data for the year follows.

Product 1:

Sales ... $300,000;

Var Mfg ... $160,000;

Var G&A ... $40,000;

CM ... $100,000;

Fixed Mfg ... $24,000;

Fixed G&A ... $36,000;

Op. Profits ... $40,000;

Unit Sales ... 1,000.

Product 2:

Sales ... $400,000;

Var Mfg ... $160,000;

Var G&A ... $60,000;

CM ... $180,000;

Fixed Mfg ... $32,000;

Fixed G&A ... $48,000;

Op. Profits ... $100,000;

Unit Sales ... 1,000.

Unless otherwise stated assume the fixed costs given above are allocated costs and unavoidable. What would be the total contribution margin in the Dubs division if production were increased by 50%? Assume there are no capacity constraints. Round to the nearest $1.00

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