Rougely Manufacturing Company produces electric carving knives. The firm has not been as profitable as expected in the past three years. As a result, there is excess capacity that could be used to produce an additional 10,000 knives per year. However, any production above that amount would require a capital investment of $\$ 50,000$. Operating results for the previous year are shown here. Assume that there is never any ending inventory.

Respond to the following independent proposals, and suppor your recommendations:
1. The production manager believes that profits could be increased through the purchase of more automated production machinery, which would increase fixed costs by $\$ 100,000$ and reduce the variable costs by $\$ 0.75$ per knife. Is she correct if sales are to remain at 125,000 knives annually?
2. The sales manager believes that a 5 percent discount on the sales price would increase the sales volume to 135,000 units annually. If he is correct, would this action increase or decrease profits?
3. Would the implementation of both proposals be worthwhile?
4. The sales manager believes that an increase in sales commissions could improve the sales volume. In particular, he suggests that an increase of $\$ 0.50$ per knife would increase the sales volume 30 percent. If he is correct, would this action increase profits?
5. The accountant suggests another alternative: Reduce administrative salaries by $\$ 10,000$ so that prices can be reduced by $\$ 0.10$ per unit. She believes that this action would increase the volume to 130,000 units annually. If she is correct, would this action increase profits?
6. The corporate executives finally decide to spend an additional $\$ 30,000$ on advertising to bring the sales volume up to 135,000 units. If the increased advertising can bring in these extra sales, is this a good decision?