Cat Hats Inc.

A close-up of a chart AI-generated content may be incorrect.

Step 2: Calculate Differential Profit

However, notice that the result is negative $550, which matches answer A, not B. Let's verify the available choices:

A. A differential profit of ($550) — This means a loss of $550, which matches our calculation.

B. A differential profit of ($700) — This would mean a loss of $700.

C & D refer to differential contribution margin (which excludes fixed costs).

Since the differential profit is negative $550,the correct answer is A.