Should the company buy the new equipment

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Reference no: EM132120021

Jack’s Grocery is manufacturing a “store brand” item that has a variable cost of $ 0.75 per unit and a selling price of $1.25 per unit. Fixed costs are $ 12,000. Current volume is 50,000 units. The Grocery can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $5,000. Variable cost would increase to $ 1.00, but their volume should increase to 70,000 units due to the higher quality product. Should the company buy the new equipment? What are the break-even points ($. and units) for the two processes? Develop a break-even chart.

Reference no: EM132120021

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