Shawn Pen & Pencil Sets Inc. has fixed costs of $$600,400.$ Its product currently sells for $$28$ per unit and has variable costs $$12\mathrm{.}20$

per unit. Mr$.$ Bic, the head of manufacturing, proposes to buy new equipment that will cost $$540,000$ and drive up fixed costs to

$$691,250.$ Although the price will remain at $$28$ per unit, the increased automation will reduce costs per unit to $$8\mathrm{.}25.$

a$.$ Compute the following break$-$even points. $($Do not round intermediate calculations.$)$

b$.$ As a result of Bic's suggestion, will the break$-$even point go up or down?

The break$-$even point will go down.

The break$-$even point will go up$.$