Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Chapter 5, Problem 6P

Shawn Pen & Pencil Sets Inc. has fixed costs of $80,000 . Its product currently sells for $5 per unit and has variable costs of $2 .50 per unit. Mr. Bic, the head of manufacturing, proposes to buy new equipment that will cost $400,000 and drive up fixed costs to $120,000 . Although the price will remain at $5 per unit, the increased automation will reduce costs per unit to $2 .00 .

As a result of Bic’s suggestion, will the break-even point go up or down? Compute the necessary numbers.

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Loose Leaf for Foundations of Financial Management Format: Loose-leaf

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