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Kent Manufacturing produces a product that sells for $63.00. Fixed costs are $396,000 and variable costs are $30.00 per unit. Kent can buy a new

Kent Manufacturing produces a product that sells for $63.00. Fixed costs are $396,000 and variable costs are $30.00 per unit. Kent can buy a new production machine that will increase fixed costs by $19,800 per year, but will decrease variable costs by $4.80 per unit. What effect would the purchase of the new machine have on Kent's break-even point in units?

Multiple Choice

  • 7,288 unit decrease.

  • 1,000 unit decrease.

  • 1,000 unit increase.

  • No effect on the break-even point in units.

  • 6,989 unit increase.

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