Self$-$check questions $7\mathrm{.}3$

Q$1.$ A retail store expects to sell $8,000$ units of its product each year at a price of $4$ a unit, a variable cost of $2$ a unit and fixed costs of $15,000.$ New technology reduces variable Jcosts to $1\mathrm{.}50$ a unit of sales, but raises fixed costs to $20,000.$ Budgeted output remains T$.{?}^N$ unchanged at $8,000$ units per year and price unchanged at $4$ a unit.

$($a$)$ Draw a break$-$even chart to compare the situation before and after technical change. Which break$-$even solution might the retail store prefer? Explain your reasoning.

$($b$)$ Consider the assumptions and limitations of your analysis.