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Markham Industries is studying the profitability of a change in operation and has gathered the following information: Current Operation. Anticipated OperationFixed 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.
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