Should audio cables buy the new equipment

Assignment Help Business Management

Reference no: EM13102044

Q. Audio Cables, Inc. is currently manufacturing an adapter that has a variable cost of $.50 per unit and a selling price of $1.20 per unit. Fixed costs are $14,000. Current sales volume is 34,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $2,000. Variable costs would increase to $.70 but sales volume should jump to 58,000 units due to a higher-quality product.

(a) Illustrate what is the break-even point (BEP) of each process? (Round your answers to the nearest whole number.)

BEP of existing process units
BEP of new process units

(b) Should Audio Cables buy the new equipment?

Reference no: EM13102044

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