Find change in break-even point

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Reference no: EM1361948

Jay Linoleum Company has fixed costs of $70,000. Its product currently sells for $4 per unit and has variable costs per unit of $2.60. Mr. Thomas, the head of manufacturing, proposes to buy new equipment that will cost $300,000 and drive up fixed costs to $105,000. Although the price will remain at $4 per unit, the increased automation will reduce variable costs per unit to $2.25.

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

Reference no: EM1361948

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