Q3) (9 pts) A company sold 800,000 units of its product for $ 90 per unit in 2014. Total variable cost is $ 62,400,000, and total fixed costs are $ 2,000,000. (a) The company manager has proposed investing in state-of-the-art manufacturing equipment, which will increase the annual fixed costs to $3,500,000. The variable costs are expected to decrease to $ 68 per unit. Marketing department expects to maintain the same sales volume and selling price next year. Should the company accept this proposal, why? Why not? (b) If the selling price decreases by 8%, and fixed cost increases by 250,000. What will be the break even point in units. Table 6: Step 3, 4, and 5 to assign cost in the next month use FIFO (case 3) Total Production cost Direct material Conversion cost Step 3 WIP, beginning Costs added during this period Divide by equivalent units of work done in to date cost per equivalent unit of work done to date Total cost to account for Step 4 Step 5 Assignment of costs completed and transferred out WIP, beginning Cost added to the Beginning WIP During this period Total cost from beginning WIP Started and completed Total cost of units completed and transferred out WIP, ending Total cost accounted for Table 3: Step 1 and 2 to assign cost in the next month using weighted average (case 3) Step 1 Step 2 Equivalent Units Physical units Direct material Conversion cost WIP, beginning Inventory Started during this period To account for Completed and transferred out during this period WIP, ending Inventory Accounted for Work done to date Total cost added during this period Table 4: Step 3, 4 and 5 to assign cost in the next month use Weighted average (case 3) Total Production cost Direct material Conversion cost Step 3 WIP, beginning Costs added during this period cost incurred to date Divide by equivalent units of work done in to date cost per equivalent unit of work done to date Step 4 Total cost to account for Step 5 Assignment of costs completed and transferred out WIP, ending Total cost accounted for