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Burns industries currently manufactures and sells 19,000 power saws per month, although it has the...

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Accounting

Burns industries currently manufactures and sells 19,000 power saws per month, although it has the capacity to produce 34,000 units per month. At the $19,000-unit-per-month level of production, the per-unit cost is$63.00, consisting of $39 in variable costs and $24 in fixed costs. Burns sells its saws to retail stores for.$79 each. Allen Distributors has offered to purchase 4900 saws per month at a reduced price. Burns can manufacturer these additional units with no change in its present level of fixed manufacturing costs.
Assume that Allen Distributors offers to purchase the additional 4,900 saws at a price of $46 per unit. If Burns accepts this price,Burns monthly gross profit on sales of power saws will :
1) decrease by$83,300
2) increase by $34,300
3) increase by $225,400
4) decrease by $161,700

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