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 costs are specifically traceable to the manufacture of P1. What would be the total projected accounting profit for the P1 product if Dubs cut the price of P1 by 25%? If it would result in a loss 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 is the current operating profit per unit for Product 1?

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