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Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.10. The machine will increase fixed costs
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.10. The machine will increase fixed costs by $12,250 per year. The information they will use to consider these changes is shown here. A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Units Sold Sales Price Per Unit Current 216,000 New Machine 216,000 $2.15 $ 2.15 Variable Cost Per Unit $1.70 1.60 Contribution Margin Per Unit $0.45 0.55 Fixed Costs $67,500 79,750 Break-Even (in units) 150,000 Break-Even (in dollars) $322,500 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $464,400 $ 464,400 Variable Costs 367,200 Contribution Margin $97,200 Fixed Costs 67,500 79,750 Net Income (Loss) $29,700
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