Using the information above, determine the additional profit of option (1) over the status quo.

Using the information above, determine the additional profit of option (2) over the status quo.

Weezer Plastics produces one product that it sells for $20 per unit. The company produces 100,000 units annually, which represents the maximum capacity available. The 2016 income statement is as follows: $2,000,000 $400,000 200,000 300,000 Sales (100,000 units) Variable costs: Direct materials Direct labor Selling and marketing Contribution margin Fixed costs: Production Factory rent Administrative salaries Net income before taxes 900,000 $1,100,000 $ 75,000 60,000 100,000 235,000 $ 865,000 Because the company can sell as many units as it produces, it is seeking ways to increase capacity. It is currently considering two options: (1) contract with a small plastics specialty shop with excess capacity or (2) rent additional factory space and equipment. The only additional costs of contracting are the purchase price and transportation, which average $13 per unit. Unfortunately, the company can only procure 20,000 units. The second alternative, rent space and equipment, allows an additional 30,000 units of production but with increased costs. Production fixed costs increase by $50,000 for an additional supervisor, and the current factory rent doubles