XYZ Company manufactures X1, a citizens band speaker that is sold mainly to truck hobbyists. The companys plant in Pinamalayan has an annual capacity of 50,000 units. XYZ currently sells 40,000 speakers per year at a selling price of $115 each. It has the following cost structure: Variable manufacturing costs per unit $49 Total fixed manufacturing costs per year $800,000 Variable selling and distribution costs per unit $11 Fixed selling and distribution costs per year $600,000 1. The marketing department indicates that decreasing the selling price to $110 would increase annual sales to 50,000 units. This strategy will require XYZ to increase its fixed advertising costs, although variable costs per unit will remain the same. What is the maximum increase in annual fixed costs for which XYZ will find it worthwhile to reduce the selling price to $110, thereby selling 50,000 units? 2. The product design department proposes changes to the X1 to add new features to the product, which will enable XYZ to increase the selling price. The changes will increase annual fixed costs by $100,000, and variable manufacturing costs by $2 per unit. At the current sales quantity of 40,000 units per year, what is the minimum selling price above which XYZ will find it worthwhile to add the new features?