The Rosa model of Mohave Corp. is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohaves two options follows:

	Rosa Umbrella			Decorated Umbrella
Estimated demand		14,000	units		14,000	units
Estimated sales price	$	12.00		$	23.00
Estimated manufacturing cost per unit
Direct materials	$	6.50		$	8.50
Direct labor		1.50			4.00
Variable manufacturing overhead		0.50			2.50
Fixed manufacturing overhead		3.00			3.00
Unit manufacturing cost	$	11.50		$	18.00
Additional development cost				$	14,000

Required: 1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations Rosa Decorated Incremental UmbrellaUmbrella Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) 2. Should Mohave add decorations to the Rosa umbrella? Yes O No 3-a Suppose hat he higher price o he decorated umbrella is expected to reduce estimated demand or this produc if Mohave sells the Rosa Umbrella with the additional decorations. units. Determine encrease ordecrease n profit o Rosa Decorated Umbrell a Umbrella Incremental Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss)