Louis company sells a single product at a price of 65 per

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Louis Company sells a single product at a price of $65 per unit. Variable costs per unit are $45 and total fixed costs are $625,500. Louis is considering the purchase of a new piece of equipment that would increase the fixed costs to $800,000, but decrease the variable costs per unit to $42. Required: If Louis Company expects to sell 44,000 units next year, should they purchase this new equipment? Write a short essay explaining your choice - be sure to use figures to support your decision.

Reference no: EM13568542

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