Considering changing the firms production technology

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Reference no: EM13917362

The Generic Publications Textbook Company sells all of its books for $100 per book, and it currently costs $50 in variable costs to produce each text. The fixed costs, which include depreciation and amortization for the firm, are currently $2 million per year. Management is considering changing the firm’s production technology, which will increase the fixed costs for the firm by 36 percent but decrease the variable costs per unit by 36 percent. If management expects to sell 45,000 books next year, should they switch technologies?

Reference no: EM13917362

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