Answer:
The net profit will increase by $11,500.
Explanation:
The number of pillows and cushions produced is 2,500 units and 2,500 units respectively.
The split-off point price is given at $14 per unit.
The additional cost of producing deluxe pillows is $8,500.
The price of deluxe pillows is $18 per unit.
The change in net income by producing deluxe pillows is
=Profit-split off point sales
=selling price-additional costs-split off point sales
=$18*2,500-$8,500-$10*2,500
=$45,000-$8,500-$25,000
=$11,500