15-18B. (Fixed costs) Tropical Sun projects that next year its fixed costs will total $135,000. Its only

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15-18B. (Fixed costs) Tropical Sun projects that next year its fixed costs will total $135,000. Its only product sells for $13 per unit, ofwhich $6 is a variable cost. The management ofTropical is consider·

ing the purchase of a new machine that will lower the variable cost per unit to $5. The new machin~

however, will add to fixed costs through an increase in depreciation expense. How large can the addition to fixed costs be to keep the firm's break-even point in units produced and sold unchanged?

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Financial Management Principles And Applications

ISBN: 9780131450653

10th Edition

Authors: Arthur J. Keown, J. William Petty, John D. Martin, Jr. Scott, David F.

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