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King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at last year's volume level of 2,200 bicycles per month are shown in the following table:

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King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at last year's volume level of 2,200 bicycles per month are shown in the following table Unit manufacturing costs Variable $223 105 Fixed Total unit manufacturing costs $328 Unit nonmanufacturing costs Variable 59 Fixed 134 Total unit nonmanufacturing costs 193 Total unit costs $521 KOSB expects to produce and sell 2,600 bicycles per month in the coming year. The bicycles sell for $590 each KCSB receives a proposal from an outside contractor who, for $165 per bicycle, will assemble 750 bicycles per month and ship them directly to KCSB's customers as orders are received from KCSB's sales force. KCSB would provide the materials for each bicycle, but the outside contractor would assemble, box, and ship the bicycles. The variable manufacturing costs would be reduced by 30% for the 750 bicycles assembled by the outside contractor, and variable nonmanufacturing costs for the 750 bicycles would be cut by 60% KCSB's marketing manager thinks that it could sell 90 specialty racing bicycles per month for $5,500 each, and its production manager thinks that it could use the idle resources to produce each of these bicycles for variable manufacturing costs of $4,500 per bicycle and variable nonmanufacturing costs of $350 per bicycle If KCSB produces the mix of 1,850 regular bicycles plus 90 racing bicycles instead of producing all 2,600 regular bicycles, it would be able to save 5% of fixed manufacturing costs; fixed nonmanufacturing costs would be unchanged REQUIRED [Note: Round unit cost computations to the nearest cent] How much will KCSB's monthly profits change if it accepts the proposal for the 750 bicycles and uses the idle resources to produce the 90 racing bicycles? (Note: if the costs of accepting the proposal are less than the costs of rejecting it, enter the difference as a positive number; if the accept costs are more than the reject costs, enter the difference as a negative number.) 298025 ncorrect

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