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Should markham industries make the change

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Reference no: EM133001131

Markham Industries is studying the profitability of a change in operation and has gathered the following information:

                        Current Operation.             Anticipated Operation
Fixed costs.             $40,000                               $53,000
Selling price.                $21                                       $27
Variable costs.              $14                                            $16
Sales (units)                  10,000                                     7,000

Problem 1: Should Markham Industries make the change?

Option 1: Yes, the company will be better off by $7,000.
Option 2: No, because the company will be worse off by $26,000.
Option 3: It is impossible to judge because additional information is needed.
Option 4: No, because sales will drop by 3,000 units.
Option 5: No, because the company will be worse off by $6,000.

Reference no: EM133001131

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