3 A company that produces concrete paving slabs is introducing a new range of ‘textured’ non-slip products.

To do this, it must invest in a new machine. Demand is forecast to be around 10,000 units per month for the first year and approximately 24,000 units per month after that. The machines that produce these products have a capacity of 10,000 units per month. They have a fixed cost of €20,000 per month and a variable cost of processing of €1 per unit. The company has forecast that they will be able to charge €4 per unit. It has been suggested that they would make higher profits if sales were restricted to 20,000 units per month in the second year. Is this true?