Incremental Costs. Infinite Audio, Inc., manufactures car speakers which it sells to other resellers, who then customize and distribute the products to retailers which sell hi-fi auto equipment. The yearly volume of output is 300,000 pairs. The selling price and cost per unit are shown below:
Management is evaluating the alternative of performing the necessary customizing to allow Infinite Audio to sell its output directly to car stereo retailers for $200 per unit under an in-house marquee. Although no added investment is required in productive facilities, additional processing costs are estimated as:

Question

Incremental Costs. Infinite Audio, Inc., manufactures car speakers which it sells to other resellers, who then customize and distribute the products to retailers which sell hi-fi auto equipment. The yearly volume of output is 300,000 pairs. The selling price and cost per unit are shown below:
  Management is evaluating the alternative of performing the necessary customizing to allow Infinite Audio to sell its output directly to car stereo retailers for $200 per unit under an in-house marquee. Although no added investment is required in productive facilities, additional processing costs are estimated as:

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The Answer of Incremental Costs. Infinite Audio, Inc., manufactures car speakers which it sells to other resellers, who then customize and distribute the products to retailers which sell hi-fi auto equipment. The yearly volume of output is 300,000 pairs. The selling price and cost per unit are shown below:
  Management is evaluating the alternative of performing the necessary customizing to allow Infinite Audio to sell its output directly to car stereo retailers for $200 per unit under an in-house marquee. Although no added investment is required in productive facilities, additional processing costs are estimated as: