A product is currently made in a process-focused shop, where fixed costs are $8,000 per year and variable cost is $40 per unit.
The firm currently sells 200 units of the product at $200 per unit. A manager is considering a repetitive focus to lower costs (and lower prices, thus raising demand).
The costs of this proposed shop are fixed costs = $24,000 per year and variable costs = $10 per unit. If a price of $80 will allow 400 units to be sold.
What is the profit (or loss) of the current process?