What is the minimum level of unit sales necessary

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Question - Pharoah Inc. produces modern light fixtures that sell for $160 per unit. The firm's management is considering purchasing a high-capacity manufacturing machine. If the high-capacity machine is purchased, then the firm's annual cash fixed costs will be $71,000 per year, variable costs will be $80 per unit, and annual depreciation and amortization expenses will equal $20,000. If the machine is not purchased, annual cash fixed costs will be $15,000, variable costs will be $130 per unit, and annual depreciation and amortization expenses will equal $11,000.

Required - What is the minimum level of unit sales necessary in order for EBIT with the high-capacity machine to be higher than EBIT without that machine?

Reference no: EM133174495

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