Soundoff, Inc., a leading manufacturer of electronic equipment, decided to analyze the profitability of its new portable DVD players. On the DVD player line, the company incurred $2,520,000 of fixed costs per month while selling 20,000 units at $600 each. Variable cost was $240 per unit.

Recently, a new machine used in the production of DVD players has become available; it is more efficient than the machine currently being used. The new machine would reduce the company's variable costs by 20%, and leasing it would increase fixed costs by $96,000 per year ($8,000 per month).

a.Compute the break-even point in units assuming use of the old machine.

b.Compute the break-even point in units assuming use of the new machine.

c.Assuming that total sales remain at $12,000,000 and that the new machine is leased, compute the expected net income.

d.Should the new machine be leased? Why?