Felix Company sells a single product at a price of $57 per unit.Variable costs per unit are $35 and total fixed costs are $719,400.Felix is considering the purchase of a new piece of equipment that would increase the fixed costs to $1,023,700,but decrease the variable costs per unit to $28.
Required:
a.If Felix Company expects to sell 40,000 units next year,should they purchase this new equipment?
b.What would Felix's volume have to be to change your recommendation in A above?

Question

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The Answer of Felix Company sells a single product at a price of $57 per unit.Variable costs per unit are $35 and total fixed costs are $719,400.Felix is considering the purchase of a new piece of equipment that would increase the fixed costs to $1,023,700,but decrease the variable costs per unit to $28.
Required:
a.If Felix Company expects to sell 40,000 units next year,should they purchase this new equipment?
b.What would Felix's volume have to be to change your recommendation in A above?

Felix Company Sells a Single Product at a Price of $57