New breakeven number of units per quarter

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The firm you work for is considering replacing some old machinery with newer machinery that will be more efficient. The net cost will increase the fixed costs of the firm by $175,000 per quarter (from 800,000 to 975,000). However, the increased efficiency of the new machinery will lower the variable cost by $1.35 per unit (from $31.55 per unit to $30.20 per unit). The product will continue to sell for $59 per unit. Given this information, calculate the new breakeven number of units per quarter. Give a brief description of the impact this decision would have on the risk of the firm.

Reference no: EM132630818

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