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Timmy Nook is considering dropping the pear product line from Nook's Cranny. Each pear is purchased directly from local villagers for $100 each, and is
Timmy Nook is considering dropping the pear product line from Nook's Cranny. Each pear is purchased directly from local villagers for $100 each, and is resold for $400. However, the lease on the machine used to sort fruit into different types costs Nook's Cranny $10,000 per year. While most of the lease would continue regardless of Timmy's decision, 10% of the cost (associated with the pear attachment) is avoidable. In addition, if Timmy decided to drop pears, he could began selling peaches (shipped in from a neighboring island) for $500 each. These peaches cost $400 to ship in, but no additional fixed costs would be necessary to sort the peaches. If Nook's Cranny currently buy and resells 100 pears per year, and Timmy believes they could buy and resell 350 peaches per year, how much would Nook's Cranny increase (decrease) NOlif they decide to drop pears? NOTE: If Not increases, write a POSITIVE number. If NOI decreases, write a NEGATIVE number
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