Q4. Manufacturing (HW). A manufacturer is currently producing an item which has a variablecost of $0.75 per unit and a selling price of $2.00 per unit. Fixed costs are $20,000. Currentvolume is 40,000 units. The firm can produce what it believes is a better product by adding a newpiece of equipment to the process line. This equipment represents an increase of $5,000 in fixedcost. The variable cost increase would be $0.50 per unit. Volume for the new and improvedproduct should rise to 50,000 units.(a) What is total profit now?(b)What will be the profit with the new machine?(c) Should the company invest in the new equipment?

Profit = Revenue - Cost incurred Revenue = Selling price X Units sold Cost incurred = Fixed…

Answered: (a) What is total profit now? (b) What…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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(a) What is total profit now? (b) What will be the profit with the new machine? (c) Should the company invest in the new equipment?