Forrester Company is considering buying new equipment that would increase monthly fixed costs from $290,000 to $320,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $120 is not expected to change. Forrester's current break-even sales are $570,000 and current break-even units are 7,500. If Forrester purchases this new equipment, the revised contribution margin ratio would be:

Multiple Choice

• 40%.

• 70%.

• 50%.

• 60%.

• 10%.