1. Nazarene Printing Company specializes in making outdoor foam signage such as that used for store sales or vote for advertising. Nazarene is considering purchasing a new machine that will reduce variable costs per sign produced by $2.00. The machine will increase fixed costs by $15,000 per year for that line of their business. The necessary information they will use to consider these changes is shown here.

	Current	New Machine
Units sold	27,000	27,000
Sales price per unit	$25.00	$25.00
Variable cost per unit	$22.00
Contribution margin per unit	$3.00
Fixed costs	$60,000
Break-even (in units)	20,000
Break-even (in dollars)	$500,000
Sales	$675,000	$675,000
Variable costs	$594,000
Contribution margin	$81,000
Fixed costs	$60,000
Net income (loss)	$21,000

1. What will the impact be on the break-even point if Nazarene purchases the new machinery? Note in the table above.
2. What will the impact be on net operating income if Nazarene purchases the new machinery? Note in the table above.
3. What would your recommendation be to Nazarene regarding this purchase?