Ans: As per Given Information

No of units Produced Annually = 15,000 units.

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(a)

Profit on Selling Price of $200 is $50 per unit.

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(b)

1) So, Total Profit Earned = No of units Produced x Profit on Selling Price

= (a) x (b)
= 15,000 x $50
= $750,000
-------------------(c)
If they sell it for $275 to Q/A labs per unit then:

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(d)

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(e)

3) Total profit per unit = Selling Price Cost Price

= (d) (e)
= $275 $200
= $75 per unit
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(f)

Added variable Expense = $50 per unit

2) Total expense = $150 + $50
= $200 per unit. = Cost Price

4) Added Profit per unit = Total Profit per unit Profit on Selling Price of $200
= (f) (b)
= $75 $50
=$25
-------------------(g)
5) Total Profit by Q/A = No of units Produced Annually x Total profit per unit
= (a) x (f)
= 15,000 x $75
= $1,125,000
-------------------(h)
As Given, Fixed Selling Expenses to Q/A is $100,000 per year -----------------6) Net profit by Q/A = Total profit Fixed Selling Expenses
= (h) (i)
= $1,125,000 - $100,000
= $1,025,000.
-------------------7) Hence, Incremental Profit =
= (j) - (c)
=$1,025,000 - $750,000
= $275,000

(j)

(i)