Garden Supplies Company produces a standard tomato planter with variable manufacturing costs of $12 per unit. The selling price of the standard tomato planter is $19 per unit. The fixed manufacturing overhead cost is $67,000. A normal production run includes 100,000 units. Garden Supplies Company has discovered an additional process to change the standard tomato planter into a deluxe tomato planter. Additional variable costs are estimated at $4 per unit. The deluxe tomato planter would sell for $24. Additional fixed manufacturing overhead cost of $23,000 would be incurred if the deluxe tomato planter is produced. There would be no change in the number of units produced.
Make an analysis to determine if Garden Supplies Company should continue producing and selling the standard tomato planter or change the standard tomato planter into a deluxe tomato planter.
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