Mullis Corporation 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? Select one: a. 9,850 unit decrease. b. 4,444 unit decrease. c. No effect. d. 5,714 unit increase. e. 4,444 unit increase.
Mullis Corporation 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? Select one: a. 9,850 unit decrease. b. 4,444 unit decrease. c. No effect. d. 5,714 unit increase. e. 4,444 unit increase.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mullis Corporation 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?
Select one:
a. 9,850 unit decrease.
b. 4,444 unit decrease.
c. No effect.
d. 5,714 unit increase.
e. 4,444 unit increase.
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