Question

Mullis Corp. manufactures DVDs that sell for $5.00. Fixed costs are $28,000 and variable costs are $3.60 per unit. Mullis can buy a newer production machine that will increase fixed costs by $8,000 per year, but will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mullis' break-even point in units?

Answer 1

Explanation:

The increase in fixed costs and variable cost means that his break even will be higher which means that the business will need to increase products being made in order for higher sales so they can make it to break even