Mullis Corp. manufactures DVDs that sell for $5.40. Fixed costs are $38,000 and variable costs are $3.80 per unit. Mullis can buy a newer production machine that will increase fixed costs by $9,500 per year, but will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mullis' break-even point in units?

Multiple Choice

• 4,750 unit increase.
• 12,259 unit decrease.
• 5,938 unit increase.
• No effect.
• 4,750 unit decrease.