Jeren Company is considering replacing its existing cutting machine with a new machine that will help reduce its defect rate. Relevant information for the two machines includes the following:

Cost Item Existing Machine New Machine

Monthly fixed costs $$32,000$ $$40,000$

Variable cost per unit $$44$ $$40$

Sales price per unit $$55$ $$55$

Required

a$.(15$ points$)$ Determine the sales level, in number of units, at which the costs are the same for both machines

b$.(20$ points$)$ Determine the sales level in dollars at which the use of the new machine results in a $10\%$ profit on sales $($profit$/$sales$)$ ratio$\mathrm{.}11-42(35$ points$)$ What$-$if analysis: Jeren Company is considering replacing its existing cutting machine

with a new machine that will help reduce its defect rate. Relevant information for the two machines

includes the following:

Required

a$.(15$ points$)$ Determine the sales level, in number of units, at which the costs are the same for both

machines

b$.(20$ points$)$ Determine the sales level in dollars at which the use of the new machine results in a $10\%$

profit on sales $($profit$/$sales$)$ ratio.