M Limited manufactures and sells two different colours of paint. The following actual information is available for last year.
The company is considering closing the blue paint department and using the extra space to increase revenue in red paint by 20%. Variable costs will increase in the same proportion as the
increase in revenue.
What would be the change in the total profit if this action is taken?
1 )
$\$ 3000{\text{ }}increase$
2 )
$\$ 29000{\text{ }}increase$
$\$ 51000{\text{ }}decrease$
4 )
$\$ 85000{\text{ }}decrease$
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