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A metal company produces a particular item for $2.50 and sells it for $3. Fixed costs associated with the item are $10,000 a year. Suppose

A metal company produces a particular item for $2.50 and sells it for $3. Fixed costs associated with the item are $10,000 a year. Suppose the company is contemplating the addition of a new piece of equipment to reduce manufacturing costs. Variable costs will be reduced to $2.25, but fixed costs will be increased by $2,000 a year. How will this proposed change in the manufacturing process influence the break-even point?

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