Wood You sells unfinished ladders for $20 each. Budgeted sales for 2011 is 5,400 ladders. Each ladder requires 23 linear feet of wood to produce. The cost of wood is $0.25 per linear foot. Direct labor is $3.00 per ladder. Variable overhead and fixed overhead costs per unfinished ladder are $1.00 and $0.50 respectively. Wood You is considering whether it should paint the ladders so it can sell them for $25.00 each. It estimates it will sell 40% of the budgeted ladders as painted with the others unfinished. The direct costs of painting each ladder are $3.00. How much is the incremental effect on profit if the company paints the ladders?

$7,560

$10,800

$4,320

($5,400)