Analyze effects of changes in operations on profit. (Obj. 8). A company's contribution margin is 48 percent. A proposal has been made to install certain equipment that would result in an increase of

$50,000 per year in fixed costs but would increase the contribution margin (through a decrease in variable costs) to 54 percent. Existing fixed costs are $260,000 per year. What increase in sales volume would be necessary in order to justify purchasing the equipment?

LO.1