Questions on Break-even point

Oct 17th, 2015
Price: $10 USD

Question description

Astro Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as show below. During a planning session for year 2009's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $200,000. The maximum output capacity of the company is 40,000 units per year.

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