Remember that Molly has a $2500 down payment saved for this purchase. The dealer will take the $500 Cash Allowance straight off
2 answers:
You might be interested in
Answer:
It will increase
Explanation:
Before the purchase of the automated machine, break even point is computed as follows:
Sale price: $40
Less variable cost: $18
Therefore, contribution per unit = $40 - $18 = $22.
With fixed cost at $16,000, breakeven point in units =
= 16,000/22
Break even cost = 727.27 units.
With the purchase of the automated machine, break even point is computed as follows:
Sale price: $40
Less variable cost: ($18 - $2) = $16
Therefore, contribution per unit = $40 - $16 = $24.
Fixed cost = $16,000 + $5,000 = $21,000.
Breakeven point in units = 21,000/24
Break even cost = 875 units.
Therefore, breakeven point will increase as a result of the purchase of the automated machine.