Final answer:
The profit impact of using higher quality raw materials that increase variable costs by $10 yet boost unit sales from 500 to 580 for Racing Bicycle depends on the additional revenue being higher than the increased costs incurred.
Step-by-step explanation:
The student's question pertains to the profit impact of using higher quality raw materials, which would increase the variable costs but also result in higher unit sales for Racing Bicycle. If the variable costs per unit rise by $10 and sales increase from 500 to 580 units, we can analyze this impact by calculating the changes in total revenue and total costs. To compute the change in profit, we must consider the additional revenue generated by the increase in sales and subtract the additional costs incurred due to both the higher variable costs per unit and additional units sold.
To determine the impact, we'll need the starting sales figures as well as the profit or loss from the increase. Without knowing the initial revenue or cost values for the 500 units, we cannot calculate the exact profit impact of these changes. In general, if the additional revenue from selling more units at a higher variable cost exceeds the increase in costs, the result would be a positive profit impact. If however, the increase in costs outstrips the additional revenue, the result would be a negative impact on profit.