Magic Inc. sells a single product at a selling price of $57 per unit. Magics variable costs are $35 per unit and its total fixed costs are $719,400 per year. Magic is considering the purchase of new equipment which would reduce its variable costs to $28 per unit but increase its total fixed costs to

$1,023,700 per year.

a. Assuming Magic expects to sell 40,000 units per year, should it purchase the new equipment?

b. Would your answer change if Magic expects to sell 50,000 units per year?

b. Would your answer change if Magic expects to sell 50,000 units per year?