Answer:
Current Profit $1,000
Proposed Profit $0
Explanation:
Current Profit:
Sales (30,000 units * $1.00) = $30,000
Variable Cost (30,000 units * $0.50) = $15,000
Fixed cost = $14,000
Profit = Sales - Variable cost - Fixed cost
Current profit = $30,000 - $15,000 - $14,000
Current Profit = $1,000.
Proposed Profit:
Sales (80,000 units * $1.00) = $80,000
Variable Cost (80,000 units * $0.75) = $60,000
Fixed cost = $14,000 + $6,000
Profit = Sales - Variable cost - Fixed cost
Proposed profit = $80,000 - $60,000 - $20,000
Proposed Profit = $0