Plymouth Corp. sells units for $100 each. Variable costs are $75 per unit, and fixed costs are $200,000.Plymouth is currently selling 15,000 units. If Plymouth leases a new machine, fixed costs will increase by $60,000 a year, but production will be more efficient, saving $5 per unit. Determine if Plymouth should lease the new machine if activity is expected to stay at 15,000 units.

Multiple Choice: Yes, total profits will increase by $15,000 if the new machine is leased.

Yes, total profits will increase by $75,000 if the new machine is leased.

No, the fixed cost increase is greater than the effect of the cost savings per unit, causing total profits to decrease if the new machine is leased.

No, profits will remain the same if the new machine is leased so it's not worth the risk.

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