Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $18 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the revised contribution margin ratio would be percent:
Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $18 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the revised contribution margin ratio would be percent:
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 4P
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Give typing answer with explanation and conclusion
![Forrester Company is considering buying new equipment that would
increase monthly fixed costs from $120,000 to $150,000 and would
decrease the current variable costs of $70 by $18 per unit. The selling
price of $100 is not expected to change. Forrester's current break-even
sales are $400,000 and current break-even units are 4,000. If Forrester
purchases this new equipment, the revised contribution margin ratio
would be
percent:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1735ae7d-245e-4951-8fce-5dbc68ba4c11%2F5c65e752-2cb2-4d8f-a244-690f34b16483%2F69zx4lq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Forrester Company is considering buying new equipment that would
increase monthly fixed costs from $120,000 to $150,000 and would
decrease the current variable costs of $70 by $18 per unit. The selling
price of $100 is not expected to change. Forrester's current break-even
sales are $400,000 and current break-even units are 4,000. If Forrester
purchases this new equipment, the revised contribution margin ratio
would be
percent:
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